FACTS FOR INVESTORS.

Auckland Star, Volume LX, Issue 56, 7 March 1929, Page 4

FACTS FOR INVESTORS.

AUCKLAND GAS COMPANY. A POPULAR INSTITUTION. GOOD DIVIDEND PAYER. Gas shares: Sellers 24/9, buyers, 24 o, last siite, "-4, 9. Tfcfe record is eloquent testimony to th" continued popularity or the_ Auckland Gas Companv with investors, tor at the rate mentioned the return per cent per annum to the purchaser is under 6Gas shares! To most investois the.» rount as gilt edaed. Certainly none listed in the local Exchange turn _ over so readilv. This is the 67th year ot the concern and manv Aucklanders wno bought shares in early'years have grown old. died and passed the scrip on. "bequeathing it as a rich heritage,'' with the tull confidence that the dividends so long available would never fail. This is a great reputation for any industrial concern to secure, and its maintenance is a remarkable tribute to past and present managements Yet having said so much, the ract | must be faced that the company, like gas companies all over the world, is facing serious competition from the purveyors ot | electric current. In Zealand this comI petition is intensified with the cumulati\e annual increase of available current. The directors of the Auckland Gas Lompanj have met the altered -conditions with courasre and enterprise, and as a consequence their customers are steadily increasins. and in some respects their position is stronger than ever, but in others it is not. Less Gas Sold. In this connection the following main items of turnover are of interest: — Gas sold 19-6. 1927. 19-8. (in cubic feet i .. 1,156.840.000 1,144,300,000 — Gas stovps supplied 28.036 31,106 35,925 Miles of main in u^e . "IS CI 3 620 Consumers 44.506 46.120 47.071) Receipts £455,190 £474,507 £470,708 It will be noted that besides the increase in consumers there has been a substantial addition to the number of gas stoves in use. Despite this the sale of gas, the company's chief object, shows a further drop". The actual figures are not obtainable, but the chairman of directors, Sir Geo. Elliot, in his annual address to shareholders, stated that ''the sales of gas have been slightly less," adding: — "This result was not entirely unexpected: for, on account of the financial depression, and the great amount of unemployment experienced in Auckland during the year, hundreds of houses have been unoccupied. Another contributing cause is the higher efficiency of modern gas appliances, notably cookers, which without doubt has its influence in reducing gas consumption." The accounts which m the past have been presented with considerably more detail than is usual with companies of this kind are this year curtailed as to items of expenditure. Last year the item "manufacture of gas"' itemised the cost of "coals," "purification." and "repairs and maintenance of works." The class "distribution of gas" showed "repair and maintenance of pipes," "meter repairs and pipes for ranges," "public lamps," This year the whole of these details are grouped under two heads, viz., "manufacture of gas" and "distribution of gas." The alteration seems regrettable in one respect. Considering that "mains and services" represent over half a million sterling in the company's assets it is highly important from an investor's point of view that he should know how much of the general revenue is devoted to repairs and maintenance. For instance, in 1927, £139,000 was so spent. In the past this information has been regularly given; it is now withheld. Less Revenue, More Profit. The following table shows receipts, profits, dividends paid, and depreciation written off during the past seven years:— Receipts. Profits. Divs. Dep. £ £ £ £ 1922 . . 462.455 68.202 50.955 28.800 1923 .. 480.016 73.160 64,479 27.678 1924 . . 489.617 79.036' 74.446 20.426 1925 . . 490.897 79.305 77.201 25.000 1926 . . 488.19 ft 83.303 80.130 24.290 1027 .. 474.507 88.327 85.062 18 00(1 1928 . . 470,708 89.321 89.312 20.250 Expenses in proportion to sales are shown as under: — Expenses. Sales. Ratio. £ £ p.c. 1022 304.253 460.736 85 57 1023 406.855 478,302 85.06 1924 410.574 487.894 84.15 1925 411.592 489.180 84.14 1026 404.806 486.483 83.21 1027 386.150 474.507 81.30 1928 381,388 470.708 81.02 It will be noted that receipts have steadily fallen during the past six years, but expenses have dropped in still greater proportion, making possible a'continuation of the usual dividends. The remarkable affinity between the disclosed profits and the amount payable as dividend . probably has some connection with the ( latitude allowed by the Income Tax . Department in such matters as deprecia- . tion, etc. In this connection it should • be mentioned that of the expenses no less than £25.800 was paid in land and income tax and local rates. It is a sore point with all gas companies that their chief competitors, electric power boards, are exempt from taxation. The Capital Position. The financial position of the company can be judged from the following summarised items, the figures for the prel vious twelve months being given for comparison:— liabilities. Dec. 31, Dec. 31, 1927. 192.?. i~ £ £ I- • r.'pital and d-i.. nturps 1.371.645 1 420 101 Loins on deposit . . 142,516 93.014 Deposits by consumers 4.255 3 470 Accrued interest . . . 5.277 3 470 Sundry liabilities .. 27.769 Bank 1.026 ~ ' Profit and loss act 84,560 85,005 ASSETS. ; Dee. 31, Dec. 31, 1927. 1928. £ £ • I" 111 ,' 1 ,. : 63,918 64,304 -> Buildups and niacli- " „ s P er - v \ 565.795 558.653 s Mains and services . 572.766 587 117 s peters 153.869 158.'117 <- a sh 20,000 3.998 , V 34. Govt. War t Loans 33,000 33.00 C i Debenture investi ments 5,700 5.70 C Sundry accounts ... 73.798 70 103 Stock 148,123 158,026 The issue last year of £200,000 -worth of debentures, replacing an issue of £150,000 then maturing, is responsible for the increase in "capital and debentures." The absence of fixed reserves has previously been commented upon in these columns, for without these shareholders have inadequate protection against the bad „ times that are liable to any business under- ' taking. Such reserves are all the more • necessary, inasmuch as the bulk of the ' assets consist of items that would be s almost unrealisable in the event of trouble, t Viewed as a going concern, th? company's ■" assets are probably worth considerably more than their face value—as very large '• sums have been written off each year from t expenses account. Thus, from 1921 tc >■ 1927. both years inclusive, a total oi i- £702,779 was written off the item that g appears in the assets as "mains and sert vices," £572,766. It io more than likely that a goodly prooprtion of this expendih ture represents hidden reserves sufficient a to tide the company over a good many e unprofitable years should these ever have to be faced.