DECLINE IN PROFIT

Waikato Times, Volume 127, Issue 21195, 19 August 1940, Page 11

DECLINE IN PROFIT

DRAIN BY TAXATION WRIGHT, STEPHENSON’S YEAR The accounts of Messrs Wright, Stephenson, Limited, for the year ended June 30 show a net profit of £32,763, a decline of £IO,OOO on the previous year’s figures. Gross earnings show an increase of £64,138. The report states that, although the commissions and trading profit, after providing general expenses and depreciation, were greater than in the previous year, exceptionally high taxation and in a smaller degree increased general expenditure resulted in a lower net return to shareholders. The raising of income tax on prior lien debenture stock, of which the company held £231,386, to 8s 9d in the pound, plus 15 per cent, had resulted in increased taxation of £2843 in this category. Ordinary income tax had increased to the maximum company rate of 3s 9d, plus 15 per cent. In the preceding two years ordinary share payments included a special dividend of 5 per cent, issued in debenture stock and cash, debited to appropriation account. The dividend,on preference shares was at the rate of 5 per cent per annum. This year the directors recommend a rate of 44 per cent on preference shares and of 5 per cent on ordinary shares. The report issued in conjunction with the balance-sheet explains that the decrease in advance accounts is brought about partly by the better prices received by clients for their wool and meat. Under present conditions many farmers were unable to carry out any development work, mainly owing to a scarcity of farm hands, and were therefore not calling on the company to the usual extent for advances. The new item of £236,426 as cash on deposit at short call represents a temporary investment of surplus cash created mainly by the reduction in the sundry debtors’ advance accounts.