FACTS FOR INVESTORS

Auckland Star, Volume LVIII, Issue 43, 21 February 1927, Page 4

FACTS FOR INVESTORS

N.Z. LOAN AND MERCANTILE. SEEKS FRESH CAPITAL. PAST YEARS COMPARED. Quite recently the New Zealand Loan ' end Mercantile Agency Company, one of ' the leading commercial institutions-of this country, sought to increase its capital by another £500,000. The terms offered, 6V3 per cent, proved exceedingly satisfactory from the point of view of British investors, and the amount was promptly subscribed. The new shares are to be called cumulative second preference shares, and will be entitled to dividend after the present 5 per cent preferential shareholders have received theirs. The capital position of the company under the changed circumstances will be: — 5 per cent cumulative preference stock 1.000,060 6j per cent cumulative preference stock 500.000 Ordinary stock 1.000.000 In addition, 4 per cent first mortgage debenture stock has been issued for £2,000,000. giving the company four and a-half million sterling of capital to work on, less £300,000 debenture stock held by the company itself. Profit and Loss. The following table indicates the trend of the profit and loss account in recent years:— Tear ended Gross Net Dvdnd. June Reserves. Return. Profit. Pref. Ord.

•L«' ? s. of income tax. The ''Loan Co.."' as it is convenient'y termed, evidently finds the same difficulty ■which most commercial undertakings have been faced with in recent years in its efforts to keep expenses down. In this connection, the following table shows that during the last financial year both general expenditure and taxation have increased, and their total of £402,373 is the largest for five years. At that time it was the heavy burden of taxation that was chiefly responsible for the high fhrure. \ and the drop that followed, while being I fairly eveniy maintained by taxes. has I been more than counter-balanced under! the general heading:— General ! administration Taxes, and office British and expenses. Dominion Total, j

The Balance-sheet. There have been substantial variations in the balance-sheets presented in recent years. Items from the last three are as follow:— 1024. lOl'.j. 1020. Liabilities other than

A glance nt these figures is quite sufficient to indicate the need for more capital. Apart from the fixed obligations of debenture stock, outstanding liabilities at balance time were increased over 50 per cent in the year ending June 30, 1925. and in two years they haa nearly doubled. Liquid assets, on the other hand, dropped in five years from £1,4 5,740 to £790,151. Advances to clients increased from just over £3,000,000 in 1922 to £3,762,214 in 1926. These figures reflect the growing tendency of the big mercantile institutions of Australia and Xew Zealand to play the part of bankers rather than that of ordinary traders. In this connection, the item temporary loans, which has figured on recent balance-sheets—on the last at £202,895 —will presumably be wiped off when the new capital becomes available. As An Investment. The stock of the company is apparently j held too "strongly by present owners, wLn | obviously have the fullest confidence in its ! future for it to go begging on the local j market. This confidence is justified on past results. Prior to the Great War the company had built up big reserves, and when the slump followed the boom period it promptly wrote off substantia] sums from depreciated assets and was still able to pay dividends. It can be assumed, therefore, that the assets of the latest balance-sheet are worth at least their face value, possibly more. Occasional sales of stock take place, but when they do purchasers have to !>e satis- j fied with a modest net for the gross receipts are subject to English income rax j ot about 2 in the pound. For the ordinary l stock there has been practically no van;!-1 ion during the past twelve months: £92 is being offered to-day for a £100 parcel or ordinary stock, and. the dividend of , per cent which has been paid in recent years as a basis, the gross returu is | £< 10/6. The sp. cent preference stor!:. ' likewise, have been stationary at about ! £S0 until recently, when a slight ad-1 vaiu-e was registered. Presumably the ' addition oi fresh capital is considered to I Have strengthened this stock, and it i< I jow woith £Sl. yielding £0 3'6 gross on I :ii* investment.

30. £ £ £ p.c. p.c. 1919 . . 701.74C 631.1S2 13S.22S 5 S 1020 . . 723.402 711.260 121.746 5 f6J 1921 . . 617.30." 405.507 '16.1S7 0 t4 1922 . . 51S.44S 505,212 36.143 5 *2 1923 .. 521.031 511,S79 02.5f>3 5 f4 1924 . . 527.756 547.46S 121.. 25 5 6 1925 . . 530.046 505,632 141.S00 5 7 192G . . 545.2SC 610,014 135,641 5 7

£ i; £ 1918-19 . . 207. GOT 127.357 424.004 1919-20 . . 328.444 138,070 4S0.514 1920-21 . . 342,41s 101.33I-. 443,754 1921-22 . . 312,073 8S.300 401,069 1922-23 . . 305,303 45.033 351,200 I 1923-24 . . 317.280 P.0.458 347,744 1 1924-25 . . 332.904 42.77s 375.742 1925-20 . . 35U.SS1 51,402 I

debentures OO.S.GOl 001.230 1.101.038 ' Advances . . S.130,0SU 3,618.340 3,762,214 Property . . *j5!i !)00 s0<) Premises . . . 295.40* 316.!>in 3S0.369 Merchandise 239.630 234..342 280.73S Shares in other companies. 210.3."i3 20G.G3S 192,011 Liquid assets 1.029,923 91 s.492 79'UOl j