FACTS FOR INVESTORS.

Auckland Star, Volume LXIV, Issue 1, 3 January 1933, Page 4

FACTS FOR INVESTORS.

COMPANY AFFAIRS. FINANCIAL POSITION ANALYSED. Details of the financial standing of certain of the well-known firms in New Zealand are given in the December issue of "Jobson's Investment Digest." Of Renown Collieries it says:— The coal trade in the past year was again seriously affected by the depression and price-cutting, while a strike of employees extending over six weeks also adversely affected the earnings. As a result the gross profits fell away by £10,741 to £9675, and though expenses were reduced considerably by nearly £7600, the net profite were £2143 lower at £436, including £97 written back from taxation reserves. These profits reduced the deficit to £96, apart from preliminary expenses, etc., of £7549. The directors state that efforts were made to stabilise the industry by agreement with the other Waikato companies, but these were unsuccessful. Still, a marketing arrangement was recently concluded with Pukemiro Collieries, Ltd. The directors consider that both companies will benefit by this agreement, and that considerable savings will be made in selling the output. The year's current revenue, with depreciation retained in the business, has enabled a satisfactory improvement to be made in the financial position. The surplus of liquid assets (including investments) over liabilities has risen by £3609 to £11,178. The main asset has been lowered by £3147 to £130,606, presumably due to depreciation. The carbonising plant of the Waikato Carbonisation, Ltd., in which this company holds a substantial share interest, is stated to have made satisfactory progress in the past year. It is claimed that the carbonettes arc giving satisfaction, both to the public and the Railway Department, which body is being supplied with 400 tons weekly. The fuel oil is stated to be of high quality, and superior to the imported product, and it is anticipated that expectations will be realised when certain minor difficulties are overcome.

Preference capital security: Tangible assets, 11/10 per 2/6 share fully paid, after the liabilities of £14,114. These shares have not an active market. The ordinary shares are not attractive at present. Net tangible assets, 16/8 per £1 ordinary share fully paid. July. 1930., 1931. 1932. £ X. £ Gross profit, etc. . 23,489 20.41G 9,075 Net profit 0,465 2,579 430 Deficit* 3,111 530 0(J ♦Subject to preliminary expenses, £7541), and property development account. South British Insurance. The journal also gives a resume of the position of the South British Insurance Co., Ltd. The chief reason for the improvement in the underwriting, says the Journal of the company, was due to the substantial reduction of £96,650 in the losses to £470,290, despite the falling off of about £43,100 in the net premiums to £804,634. This decrease in losses would appear to be, as the chairman said at the meeting, due to a sense of carefulness by owners of propertyawakened by the necessity for economy. It has been the experience amongst Australian underwriters that owners of businesses, particularly those in the country, have realised that a fire might mean irretrievable disaster. Many storekeepers are so involved financially to-day that the prospect of obtaining credit to recommence business in the event of fire would not be at all bright. Consequently they are taking greater precautions against fire than ever they did before. The directors of this company were able to reduce the expenses by about £7.300 to £274,100, but as this was not proportionate to the falling off in premiums, the expense ratio increased from 33.19 to 34.1 per cent. Owing, however, to the smaller losses there was an underwriting profit of £60,255, as against a loss of £611 in 1931, and the profit ratio was 7.5 per cent, which is indeed satisfactory. Owing to the reduction in interest rates generally, interest revenue fell away by about £4,750 to £132,908, and the net profit improved by £57,100 to £153,854 prior to writing £40,000 off the company's premises.

The dividend remained at 2/8 per share (13.3 per cent), which left £16,302 for reserves, now £1,679.423, including unexpired risks reserve of £450,000, but excluding leasehold sinking fund.

The liabilities, though increased by £17,908, are still small at £390,577 compared with the total assets of £3,180,650. These are well invested and are corrfposed for the most part Of Government securities £1,152,000, municipal and other debentures £443,000, stocks, shares and debentures £590,000 and cash £246,000.

Plans are being prepared for additions to the Melbourne building, which requires renovating, and other plans are also in hand for the erection of a two-storey building on the site of the company's former building at Napier. The shares at £2 17/6 (New Zealand price) are a sound investment for permanent holding, showing a return of £4 12/6 per cent. The price in Australia, £3 2/, is relatively cheaper, allowing for exchange, while the return, with exchange at 14% per cent, is £4 18/. Net assets, £2 12/6 per £1 share fully paid, including unexpired risks reserve. FIGURES OF TRADING. August. 1930. 1031. 1932. £ £ £ Net prems. .. 991,047 847.718 804.«34 Loss p.c 02.2 66.88 58.4 Exes, p.c 30.7 33.19 34.1 Undwtff. profit 70,220 611** 60,255 P.C. ot net prems 7.1 Dr. .07 7.5 Interest 140,870 137,054 132,908 Net profit* .. 191,036:1: 136,743 153,854± : Dlv.—% 13.3 13.3 . 13.3 „ amount 137,552 137,552 137,552 Reserves§ ...1,597,427 1,663,121f 1,679,423 **Loss. •After providing £500 in 1928. £483 in 1929, and £300 in 1930-31-32 for leasehold sinking fund. Jlncludes £1,708, £7,197, >£246 and £991 added to investment fluctuation account, and after writing £20,000 off premises in 1930 and £40,000 in 1932. S Includes reserve for unexpired risks. tlncluding unexplained addition of £57,910 and £66,503.