BREWERY BUSINESS

New Zealand Herald, Volume LXX, Issue 21548, 20 July 1933, Page 7

BREWERY BUSINESS

NEW ZEALAND COMPANY REDUCTION IN PROFIT TAXATION AFFECTS OUTPUT [by telegraph—own correspondent] WELLINGTON. Wednesday The report and balance-sheet of New Zealand Breweries, Limited, for the year ended March 31, were adopted at the annual meeting of shareholders to-day. In the absence of vSir iVlfred Bankart, chairman rand . managingdirector, who is abroad, the actingchairman, -Dr. P. F. McFvedy, presided. Dealing with the accounts, Dr. McEvedy stated gross profit was £550,079, or £4981 less than last year. From this must bo deducted the amount of beer duty paid, £472,856, which was £4533 more than was paid last -year on a larger output. The net profit was therefore £77,224, or £9515 less than in 1932. The profit was arrived at after making some allowances for depreciation on land and buildings, plant .and machinery, and rolling stock, and providing for all charges, and the cost of*the administration-of the company, and was approximately 11 per cent less than last year. •Tall in -Net Profit The full effects of the economies instituted in 1932 were not felt to tha full in that year, but as it became apparent during the year- that further provision would be necessary if a dividend was to be paid to shareholders, other and far-reaching economies had been made. The company's net profit had falleu since 1931 by no less -than £88,654, or 53.44 per -cent, due not only to a decreased output consequent upon the decreased purchasing power of the people, but in the main to -the very heavy excise duties that had been imposed. The carry forward from last year of £12,008, added to the net profit of £77,224, brought the amount to the credit of the appropriation account to £89;232. That amount, less the interim dividend of £38,229, paid in December last, left £51,003 now available for distribution.

The directors did* not propose any addition to the reserve fund, which stood at £115,000, but recommended the .payment of .a final dividend .for the year of 3-} per cent on the share capital, absorbing £38,230, and making 7 per cent for the year, -.the .balance of -£12,773 to :be-carried forward to the noxt. account. Balance-sheet figures A .perusal of the balance-sheet, stated .Dr. llcEvedy. showed that after allocating £12,500 for depreciation, land ,aud buildings now stood at £500,188. Machinery and plant had been written down to £84,793. Stocks on hand and advances against barley and hops stood .at £137i089, or ,-£37,714 less (than last year. Investments at £597,437 were more than last -year by £BO6O. All investments had been carefully reviewed ; and 'the directors :felt justified in concluding that they fully rthe values -which had been placed upon them. Book debts at £102,478 were £13,059 less >than last year, reflecting the restricted trading conditions which existed. Cash resources were larger than last year and-had been built up to pay the outstanding debentures amounting to £64,171, which had now 'been repaid. Capital remained the same. Sundr.v creditors were higher by £16,892. -Government taxes had amounted to ■no less' than 57.42 .per cent of--the profits -earned by the company, ;being 0.95 per cent greater than last year, and equal to the corresponding decrease in the dividend -which it was proposed to pay shareholders.

1 Growth in Taxation In reference to the heavy burden of taxation -and the effects of the Ottawa agreement, Dr. McEvedy, said the anomaly now existed in "that taxation on the product, -manufactured from materials grown bv farmers localjy, had, been increased (in recent years by no iless than 500 per cent, While the taxation on imports'from the •United [Kingdom and Australia had been maintained at the sanie rate as that of 30 years ago. When it was remembered that the brewery business supported many protected industries, and bought locallygrown barley at a priro approximately 50 j«r cent higher than in any other country in the world, it sfeemed incomprehensible that its competitors from the United Kingdom, Australia, Belgium, 'Germany and Japan should receive such favoured treatment, thereby further increasing the difficulties of the industry's position. In addition, the imposition of a sales tax of 5 per cent had meant a further direct burden on the industry. The economic conditions which continued to prevail in the Dominion precluded customers from bearing the whole of the tax, and by far tho major portion of the cost had had to be carried by the company, with an adverse affect on its profits. The British Government had recognised the danger to its revenue by the exce,ssjvo -taxation of the browing industry and bad had to reduce the excise duty. In New Zealand, direct taxation on beer had resulted in a serious decrease in production, which was likely to be progressive and result in a diminished revenue from this source. Under the increased and burdensome beer duty now operating, the practice of home brewing continued to prosper, and it wns incomprehensible that the Treasury, in its search for revenue, should have neglected for nearly three years such a promising field. The report and balance-sheet were adopted. Messrs. •Speight, Davis and Duncan were re-elected directors.

The company has .just completed its tenth year of operation. The lower dividend of 7 per cent, which was announced in the Herald on May 22, compares with 8 per cent last venr, 12i per cent in 1931 and 15 per cent in 1929 and 1930. In the first five years the dividend was 10 per cent. The net profits announced by the company have been in successive years as follows: —1924 (nine months), £85.'(>41; 1925. £103,"220; 1926, £109,541; 1527, £37.372; 1928, £121,332; 1929, £128,848; 'j1930, £123-038; *1931. £165,878; 1932, £86,739: 1933, £77,224.. "Owing to the conversion of most of the company's debenture stock into shares in this year, the company was relieved of the payment of interest, which always had been provided bofore the accounts were issued.