FACTS FOR INVESTORS.

Auckland Star, Volume LXVI, Issue 164, 13 July 1935, Page 4

FACTS FOR INVESTORS.

FARMERS' FERTILISER CO.

INCREASE IN PROFITS

DIVIDEND RAISED TO OV2 PER CENT

The sound condition of the leading New . Zealand industries at the present time 1 is exemplified in the latest results announced by the New Zealand 1' armors . Fertiliser Company. For the year ending • May 31 both gross and net profits show 1 an increase and the directors have felt ; justified in recommending an increase in dividend to 5% per cent. i Formed in 1917 as a farmers' company 1 with a capital of £261,995, it subjected iu its early years to vicissitudes ' common to the establishment of sucn ! enterprises. Once the early difficulties 1 were overcome its progress was really remarkable. Facing keen competition of existing powerful companies in the same line of business, and compelled for a ' time to lean heavily 011 the bank, the company nevertheless made solid headway until it secured 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 1 directors decided to purchase works at 1 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 works in Taranaki. it may be mentioned, had been erected and conducted as a stock killing and freezing establishment. They were renovated and altered to suit the purposes of the fertiliser industry, and with improvements added from time to time, are, for practical purposes, recognised as equal to those of any similar institution in the Dominion. No less than £250,000 has been spent 011 these works, a result that has been achieved without any further call 011 shareholders for additional capital. Past Years Compared. Details taken from the accounts, together with the figures for previous years, are as follow: — Cross Not Pi v. Year. profit. prolit. p.c. Reserves. £ £ £ 1926 ... 93,308 27.156 71 25,346 1027 ... 88,740 25.187 7J 30,883 1028 ... 70.800 17.626 li 32,780 1020 .. . 97,435 27,655 8 32,085 1030* .. 99.321 30.075 8 33,007 1031 ... 54,575 4.0451 — 37,656 1032 ... 60,0811 3 5,785 5 40,342 1033 ... 66,224 13,281 5 40,524 1034 ... 74,255 17,718 5 45,143 1035 ... 80.813 18,837 5J 40,560 ♦For fourteen months. 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. This check proved only temporary, and when price-cutting ceased profits again returned to normal. Then came the slump, which hit the farmers with especial force, and the fertiliser business was one of the first to suffer. The strong position attained bv the company enabled it to come through the bad times with flying colours, and though dividends were withheld for two years, tin* accounts never failed to show a profit. For the year that has just closed the 5Vt per cent dividend proposed will absorb £14,400, leaving a margin of over £4000 from net profits to strengthen reserves. The financial position may be gauged from the following tables showing the movement in the chief items of the balance-sheet:— LIABILITIES. Pali I Oilier 11aDate. Capital. Overdraft, bllities. £ !£ C 1026 261,005 178,623 35,032 1027 261.00.1 181.221 45,788 1028 201,005 168,502 43.670 1020 201.005 140,875 42,880 1030 2(11.005 107,090 41,126 1031 261.005 105,652 10,006 1932 261,005 1511,218 11.015 1033 2(11.005 104.88(5 27.143 1034 261.005 118.802 4 4,800 1035 261,005 114,205 49,510 ASSETS. Land, buildings Book Date. and plant. Stocks. Debts. £ £ £ 1026 434.307 37,68(5 30,177 1027 424.378 64.824 37,265 1928 411,511 42,681 55,385 1020 415.405 51.373 35,265 1030 421,408 07,812 38,302 1031 414.870 70.348 21,003 1032 408,510 44.002 30,082 1033 405,736 100,359 22.183 1034 302.082 45.847 45.001 1935 383.300 60.361 36,950 The above table indicates a steady and persistent improvement in the liquid position, and it would appear that liberal depreciation has been written off the fixed assets. It will be noted that in ten years the fixed assets have been written ofl by over £50,000 plus the substantial additions that have been made to property and plant in the period. Liquid assets represented by stock and book debts arc well over £100.000, leaving the margin as against open liabilities of less than £60.000. This leaves a definitely strong position from the point of view of all concerned, namely, the bank, other creditors and shareholders. However, tin! weak feature of the company's finance has always been its substantial dependence on the bank. Now that its general position has become so firmly established, and with its shares selling freely at above par, the time would seem to be opportune to raise fresh capital to liquidate the bank's debt. There is no doubt a bank overdraft provides a convenient form of financing, but, like call money in any other form, payment may be ' demanded at an inconvenient period. There is abundant money available at i the present time, and now that public confidence in industrials lias been again established, an appeal in this direction I would probably bring satisfactory results.