FACTS FOR INVESTORS.

Auckland Star, Volume LXV, Issue 138, 13 June 1934, Page 4

FACTS FOR INVESTORS.

MORRIS, HEDSTROM, LTD.

REDUCED PROFITS LAST YEAR. LATE DIVIDENDS UNCHANGED. Trading conditions in the Islands are reflected in the 24th annua! report of Morris. Hedstrom, Ltd., an old-established Fiji firm which carries on operations in the tropical and sub-tropical zone of the South Pacific. For the year ended March 31, a decrease of £5365 in net profits was recorded, but the same final dividends are recommended for distribution, making the return on preference shares 6 per cent for the year and on ordinary shares 4 per cent. The following items are taken from the accounts in recent years:— Dividends. Net pref. ord. March. profits. p.c. p.c. Reserves. 192S . . £ 72,802 0 7J £151,023 1929 ... 78,661 6 8 174,228 1930 ... 70,375 6 8 192,710 1931 ... 49,141 6 6 167,615 1932 ... 23,610 6 4 148,500 1933 ... 36,164 6 4 152,726 1934 ... 30,790 6 4 153,029 The directors report that in Suva and in most of the sugar districts trading results have been satisfactory, but in the districts dependent; upon copra that industry has not been profitable. In addition, a heavy loss was sustained owing to the rapid decline in the price of Sumoan cocoa during the year. This year, for the first time, Lautoka and Ba accounts for the full period have been embodied iu the company's profit and loss account, and this is stated to explain why economies effected during the year are not apparent in that account. Normal provision has been made for depreciation, but no attempt has been made to deal with the abnormal reduction iu both realisation and utility value of properties brought about by the fall iu the price of copra. Financial Position. During the past two or three years, in the face of trading difficulties, the company has maintained a strong financial position, and "the latest survey of its finances shows that the amount of cash in hand and in the bank, added to the value of Government securities held by the company, is considerably in excess of the total liabilities. ' This reveals a high state of liquidity, which reflects good management. The following comparison of the cash position of the company on various dates is interesting:— Outstanding Cash on Liabilities. Hand. £ £ 1922 269,511 684 1029 145,370 1,196 1932 48.044 61.240* 1033 40.565 10,550 1934 31.510 22,844 •Includes cash in bank and Government stocks. The following table shows the fluctuation in the value of the principal assets:— Assets. 1929. 1933. 1934. £ JC £ Freeholds and leaseholds . . 328,476 37T,G93 361,731 Floating stock and plant .. 10,840 19,592 21,179 Produce and . ,_„ merchandise. 341.41S 212,276 221,4,3 Branches 129,445 65,706 70,300 Debtors 88,077 132,596 113,432 Investments .. 191,751 122.466 124,17S

1,090,010 949.55S 941,137 Apart from the changes in the figures which retiect the fall in the value of produce generally in the last two years, as compared with 1929, the most noticeable feature is the increase shown in the value of the company's properties, though the largest item, freeholds and leaseholds, has fallen somewhat in the latest period. The fluctuation between 1929 to 1933 is due substantially to the alteration in the arrangement of subsidiary companies two years ago, -which resulted in a transfer of capital value from branches to the company. The general impression is that the position has been fairly stable siuce the change was made. Prospects For Coming Year. In his address to shareholders, the chairman of directors, Mr. J. M. Hedstrom, says that twelve months ago shareholders were told that the prospects for coming year were "mixed." He adds: "That statement is equally true to-day. Fortunately the company has a very substantial proportion of its assets invested in districts which are not dependent upon the copra industry, and in those districts prospects for the coming year are reasonably good. On the other hand, it would be idle to hope for any reasonable return this year on capital invested in ocpra districts, although certain heavy losses :n some of those districts which were experienced in the year ended March 31, 1934, are not likely to be recurrent.''' The latest accounts shov that the company's subscribed capit?.'r, totalling close on three .quarters of a million, is well covered, and there is a substantial margin of assets for each £1 of share capital.