Level 3 Bishops See 235 St Georges Terrace Perth WA 6000 Australia Telephone 08 9415 2800 Facsimile 08 9415 2880 wilsongroupau.com 29 February 2016 Ms Marian Wilkinson c/- Four Corners ABC-TV GPO Box 9994 SYDNEY NSW 2001 Dear Marian, nd I write in response to your email of 22 February, 2016 which seeks clarification on the tax affairs of Wilson in Australia and in essence questions whether Wilson derives lower levels of taxation as a result of its ownership structure. Tax Structure Wilson Parking and Wilson Security are part of the Wilson Parking multiple entry tax consolidated group, within Australia (the Wilson Parking Group). The PWC audited accounts of the Wilson Parking Group are available in the public domain and a review of these will clearly demonstrate that Wilson is a significant contributor to the Australian economy and taxation system. Australian Tax Office Wilson is in good standing with the Australian Taxation Office and fully abides by its tax obligations both at law and in spirit. The Wilson Parking Group meets all of its Australian tax obligations. In your letter you refer to our 2014 revenues and profit as disclosed by the ATO recently and I clarify that Wilson operates in service industries with large workforces. This equates to significant cost bases in labour, rent and other associated areas. Wilson realises profits of circa 4-5% from these revenues. Security and Parking Industries A comparison to any industry competitors will confirm that this is in line with industry expectations and performance. To assist you in confirming these facts, I have attached a summarised version of the company accounts for the past three years including some explanatory notes. Wilson is an Australian based and managed company which contributes significantly to the Australian economy as an employer, investor and tax payer. • • • • Wilson provides employment for approximately 9500 personnel Wilson has also directly invested in excess of $150M in Australia in the past three years Wilson meets its corporate taxation requirements at the same relevant rate as any comparable Australian owned company and the attached data illustrates this I can also confirm that there has been no dividend or earnings remittance to the British Virgin Islands, in the past 25 years. The attached information clearly illustrates that the company structure of Wilson does not result in any reduction in company tax payable and that Wilson is a fully compliant business that meets all of its Australian taxation requirements in full. Michael Quinlivan Group Chief Financial Officer and Company Secretary 2 Annexure A: Wilson Structure Wilson Parking and Wilson Security are part of the Wilson Parking multiple entry tax consolidated group, within Australia (the Wilson Parking Group). The Wilson Parking Group meets all of its Australian tax obligations. Whilst the Wilson Parking Group has a corporate structure that includes the British Virgin Islands, there has been no dividend or earnings remittance to the British Virgin Islands, in the past 25 years. To be clear Wilson does not derive any material tax benefit from its corporate structure. To suggest that Wilson has at any stage used its company structure to avoid its company taxation in Australia is incorrect. Financial Summary To clearly demonstrate this fact, we have set out below a summary of our financial performance for the three years ended 30 June 2013, 2014, and 2015, extracted from our independently audited accounts. These accounts, and previous years accounts are readily available on the public record at ASIC. Revenue Less Operating Costs Employee costs Property rents Depreciation & amortisation Finance costs Other costs – labour sub-contractors Other costs – other Share of Associated company loss Profit pre tax Income tax expense Profit after tax Year Ended 30 June 2015 A$’000 928,318 Year Ended 30 June 2014 A$’000 708,680 Year Ended 30 June 2013 A$’000 542,064 501,649 178,230 16,020 4,916 103,331 82,570 409 41,193 13,596 27,597 361,914 172,502 12,688 1,840 47,812 79,064 315 32,545 9,313 23,232 269,035 152,259 12,580 1,931 25,254 53,962 27,043 8,211 18,832 It can be seen the Wilson Parking Group incurs significant operating expenditure for employee costs, labour sub-contractors and property rents in Australia. The Wilson Parking Group employs approximately 7,000 employees and approximately 2,500 labour sub-contractors. In fact, Wilson Group’s most significant expenditure occurs in the area of employee benefits which also generates additional income tax payments in Australia. The Wilson Parking Group meets all of its Australian income tax obligations, is in good standing with the Australian Tax Office, and has no current disputes or open items. LS/MQ2120 Financial Summary Graphic Royalties - 0.2% Interest to Related Parties - 0.1% 2.1% 1.7% 4.2% 4.4% 2.9% 11.1% 54.0% Employee Benefits Rental & Leases Contractor Fees Parking Levies & Taxes Travel Depreciation & Amortisation Interest to Related Parties Royalties Other Expenses Profit 19.2% Overseas Intellectual Property and Royalty Payment Included in the other costs is a royalty expense for use of the Wilson brands and intellectual property to an offshore entity in the Netherlands, this is a minimal fee and is not material in the context of the company’s operations. Again, this information is publically available however we have outlined the detail as follows: Year Ended 30 June 2015 A$’000 Royalty for use of brand names and intellectual property Royalty as a % of revenue Year Ended 30 June 2014 A$’000 Year Ended 30 June 2013 A$’000 1,807 1,692 1,148 0.2% 0.2% 0.2% Also included in the finance costs is the interest expense for related party loans to entities mostly resident in Singapore and The Netherlands, as follows: Related party interest Year Ended 30 June 2015 A$’000 1,357 Year Ended 30 June 2014 A$’000 1,389 Year Ended 30 June 2013 A$’000 1,931 Includes : A$276,314 paid in 2015 and A$275,468 paid in 2014 to the ultimate holding company in the British Virgin Islands Both the royalty and interest charges comply with Australian and International transfer pricing rules. LS/MQ2120 Collectively these represent approximately 0.3% of our revenue. Taxation The Wilson Parking Group submits an annual consolidated tax return to the Australian Tax Office. The summary of our income tax position is as follows: Year Ended 30 June 2015 A$’000 1,061,129 Year Ended 30 June 2014 A$’000 899,967 Gross revenue Taxable income 51,431 41,866 (gross revenue less deductions) Tax payable 15,429 12,560 Less R&D tax offsets (1,191) (1,257) Tax paid 14,238 11,303 Tax rate 30% 30% Note 1: Gross revenue for tax purposes includes managed carpark revenue. Year Ended 30 June 2013 A$’000 762,647 34,264 10,279 (1,322) 8,957 30% Again, the taxable income and tax paid for 30 June 2014 is available on the public record. We refer to the Australian Tax Office release of top 1000 companies tax information, November 2015. The Wilson Parking Group is very conscious about all of its other tax obligations within Australia including: • Salary and wage taxes • Superannuation levies • Payroll taxes • Goods and services taxes • Fringe benefits taxes • Parking levies • Land taxes • With-holding taxes (on royalties and interest) • Customs duties • Stamp duties Australian Investment The Wilson Parking Group continues to continually reinvest its profits in Australia as follows: Year Ended 30 June 2015 A$’000 Investment in capital expenditure: plant & equipment and land & buildings Investment in business acquisitions Total investment in Australia LS/MQ2120 Year Ended 30 June 2014 A$’000 Year Ended 30 June 2013 A$’000 21,728 101,556 11,816 212 21,940 12,942 114,498 15,372 27,188