The
Packer family’s PBL is an experienced tax system player when it comes to extracting
maximum value from its lawyers, advisers and wide-spread business
operations.

And nowhere was this clearer than in today’s 2005
results, which show that once again it’s paid tax at substantially less
than the required 30% corporate rate. In fact the real rate was closer
to 13%.

The
group reported after tax earnings (but before non-recurring items which last
year where $184 million) of $485.9 million. This was on 4.2% on an actual basis,
or up 18.8% (to $532.5 million) to take account of the ‘normalising’ of win rates in the company’s casinos division
at Crown and Burswood. Those
were unfavourable this year against the favourable win rates of 2003-2004.

But if PBL
paid tax at the full rate, the actual profit would have been sharply
lower.

The PBL
accounts say that on a pre-tax profit of $572.6 million, the prima facie tax
bill would have been $171.78 million, but that the actual amount was $83.10
million.

That
$88.68 million difference was made up of capital losses used of $10.2 million,
revenue losses used of $14.27 million, differences arising on repayment of group
loans, $26.67 million and over provision in prior years of $34.51 million. Other
items were $2.96 million.

But
this is not the first time this has been done at PBL. Last year, the
sale of investments in the US produced capital profits of $184
million, the company reported pre-tax earnings of more than $806 million. By
skilfully using the tax laws, it slashed the $241
million by $112 million.

The
effective tax rate in 2005 of 13.2% compares to the guidance rate to analysts
and big investors during the year of 20%, which indicates management raided the honey jar to make sure earnings
rose.

But
because of the $113.7 million in write-downs on the cost of programs at Nine,
including the cost of the Commonwealth Games, analysts will now lift the
earnings forecasts for the company in the coming year because that will mean
lower costs in the current year, and in 2005 to 2008.

Cost cuts at Nine totalled just over $140 million, including the $27.9 million in a
one-off restructuring charge.