FACTS FOR INVESTORS.

Auckland Star, Volume LX, Issue 105, 6 May 1929, Page 4

FACTS FOR INVESTORS.

N.Z. FARMERS' FERTILISER. A CHEQUERED CAREER. LAST YEAH THE BEST. Not many businesses of consequence have faced 'the herculean task which confronted the directors of the Auckland Farmers' Fertiliser Company a few years back and survived to pay twenty •shillings in the pound as well as reasonable dividends to shareholders. Formed in the first instance as a farmers' company, it was based on extravagant promises. The paid capital of_ the company (close on a quarter of a million sterling) was rapidly vanishing when the present management took hold. The subsequent results hav° been truly i remarkable. Handicapped by its past, faced with keen competition of existing powerful companies, compelled to lean heavily on the bank, the company lias nevertheless made steady progress until it now has a recognised position as one of the leading firms in the Dominion. In 1926, with a spirit that may be described as "splendid optimism," the directors decided to purchase, works _at New Plymouth. It was a bold step,_ involving further heavy calls upon capital, but the logic of events seems to have justified the extension. The year ending March 31, 1928, was notable for the fertiliser war which cut deep into the company's profits, and compelled a reduction of the usual rate of dividend, but the latest report shows that the leeway has almost 'been made up. Both gross and net profits have been the greatest irt the history of the ■company. The following •table indicates the trend of business since 1922:— Year ended Gross Net Div. Nominal March 31. profit, profit, p.c. reserves. , £ £ £ 3 922 .... — 15,916* — — 1923 .. 65.682 7.247 — 24.-112? 1021 81,575 24,106 —- 21,734 1925 .... 84.812 25,724 23,016 1926 93,368 27,156 7h 25,346 1927 85.740 25,187 7J 30.883 1928 T'.l.SOfl 17,626 (> 32,789 1929 .... 97.231 27.655 8 32.955 *Loss. In their last statement to shareholders the directors give an assurance that stocks have been conservatively valued and that d-epreciation has been written off on the full scale. Attention has been drawn in these columns in the past to the intangible asset described as "Bights and concessions'' which stood at £13,009. Half of this sum is to be written off from this year's profits and the report expresses the intention to have the balance cancelled after next balancing if profits permit. The financial position may be gauged from the following tables showing the movement in the chief items of the balance-sheet: — LIABILITIES. Paid Other Date. capital. Overdraft, liabilities. . £ £ £ J 922 .. 261,942 125,382 4,894 1923 .. 265.111 51,523 25.734 1924 .. 261,745 • 22,780 46,00S 1925 . . 261,995 89,630 52,935 1 .. 1'61,f)95 175.623 35.932 1927 . . 261,995 ' 181,221 45,788' 192$ .. 261,99.". 3 OS. ">O2 43,709 192'J . . 201,995 149,875 42,889 ASSETS. Land buildings Book. Date. and plant. Stocks. debts. ££ £ '

1922 .. 30ft,S10 30,968 11,514 19211 .. 294'951" 15,130 24,000 1924 . . 275.1554 10,3<!4 35,906 1925 . . 368,339 25,575 29,751' 1926 .. 434,307 ' 37,686 36,177 1927 . . 424,378 64,524 37,265 1928 .. 411,511 42,681 55,385 1929 .. 415,495 51,373 35,265 Reference has been made to the dependence of ihe company on outside credit. This is an undesirable feature, and it is satisfactory to find that year by year, despite the increasing demands of an expanding business, the overdraft is 'being substantially reduced. During the year the assets have been increased by the addition of two storage buildings for superphosphate, one at Auckland, the other at New Plymouth. Additional plant has also been installed. Under the circumstances the addition of approximately £4000 to the 'land and buildings account seems quite modest. This account represented more than lVs times the paid capital of the company. In this connection the chairman stated at last annual meeting on June 1, 1928: "It would be noted that after providing for additions to the New Plymouth plant, the value of land, buildings, machinery and plant at Auckland and New. Plymouth stood at £12,827 less than last year,' showing that ample depreciation had been written off."

An arresting fea'ture as the big reduction in the amount owing by sundry debtors. Referring to the high figures of a year ago the chairman said they indicated a marked increase in business. It will be interesting to learn the explanation of this year's reduction. As stocks have increased it might be assumed that sales towards the close of the 'year have been less, but the amount of profit seems to preclude this suggestion. Finalising the position, the company appears to have substantially strengthened its position during the year just closed. The confidence of the investing public has been well maintained in recent yeans, and the shares have been in almost constant demand. The following has been the market price on May 1 in recent years, it being noted that until October last the par value of the shares was £5 and since then has been £1: — 1924 1925 1926 1927 £ s. d. £ s. d. £ s. d. £ s. d. 3 19 0 500 500 400 192S 1929 1 £ s. d. £ s. d. 4 10 0 12 9 The market price when the share value was first reduced to £1 was 17/6. Investors, therefore, place the shares higher than at any previous period in the. company's history, giving a- Tcturn based on latest dividend of approximately seven per ccnt.