Trust announces satisfactory result

August 31, 2011

Trust announces satisfactory result

Despite the constraints of operating in a tough recessionary climate, the underlying profits of the Invercargill Licensing Trust announced today are comparable to last year’s satisfactory results.

Slightly ahead of budget expectations, the Trust’s pre-tax operating profit for the 2010/2011 financial year of $6.954 million is 1.8 percent lower than last year’s result of $7.085 million.

However, due to a one-off accounting adjustment to its deferred taxation expense of $4.959 million, the Trust’s net after-tax profit for the year, before grants, is $620,020 – significantly lower than last year’s result of $5.504 million.

Trust general manager Greg Mulvey said the taxation expense stemmed from recent Government tax changes which removed the ability of commercial property owners to depreciate buildings for taxation purposes from 1 April, 2011.

“While this has not resulted in any additional tax payment, the Trust was required to reflect an additional tax charge of nearly $5 million for the 2010 year which has created a lower level of reported profit,” he said.

“This adjustment to profit has no impact on the company’s underlying profitability or cash flows and is a one-off, non-cash, accounting entry.”

The Trust’s net after-tax operating profit, before deferred taxation adjustment and grants, is $5.579 million – up marginally on last year’s result of $5.504 million.

“Considering the on-going challenges of the economic environment we are operating in, the overall profit is a solid performance and represents an acceptable result for the Trust,” Mr Mulvey said.

“Most importantly, it enabled us to return a substantial amount to the community in grants to fund a vast array of projects and initiatives, all of which contribute to our city being a wonderful place to live, work and play.”

A total of $9.473 million in grants was injected into the community, comprising $3.7 million from the Invercargill Licensing Trust and $5.773 million from the ILT Foundation.

The one-off deferred tax adjustment also had a dramatic effect on the after-tax performance of the consolidated group, which consists of the Invercargill Licensing Trust, the ILT Foundation and the equity value of the Invercargill Licensing Trust’s investment in DB South Island Brewery Ltd.

“The consolidated group’s net after-tax profit, before grants, was $5.217 million – considerably lower than the $11.223 million recorded last year which can primarily be attributed to the taxation expense,” he said.

Another key component of the group result was the value of its investment in DB South Island Brewery Ltd reducing by $514,000 (compared to last year’s $486,000 increase) due to the timing of profit distributions which affected the net tangible asset value included in the financial statements.

The ILT Foundation’s profit was $5.111 million, down slightly on last year’s profit of $5.233 million.

The Invercargill Licensing Trust will hold its AGM on Tuesday, September 6 at 7.30pm at Elmwood Garden.

Ends

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