FACTS FOR INVESTORS.

Auckland Star, Volume LXVIII, Issue 270, 13 November 1937, Page 4

FACTS FOR INVESTORS.

WOOL WORTHS (N.Z.), LIMITED. SUCCESSFUL OPERATIONS. ll Woolworths (N.Z.), Ltd., was formed in I 1929 to conduct cash retail stores on the j lines adopted by its parents, Woolworths, ; Ltd., whose headquarters are in Sydney. | It may be assumed that the Australian I organisation still holds a large interest, I for, although headquarters are in Wei- ' lingtou, the directorates of the two com- ' paines are identical, and the annual meetings of shareholders are held in Sydney. During the first year of operations four stores were established, two in Auckland and one each in Wellington and Christchurch. The capital at that time stood at £54,450, in ordinary £1 shares. The business expanded rapidly, and to provide the fresh funds necessary the directors secured authority to increase the capital to £150,000 in 100,000 ordinary shares, and 50,000 cumulative preference shares. The latter only were offered for public subscription. A 6 they were to carry a dividend of 9 per cent, and the company had paid 20 per cent as dividend to ordinary shareholders for the first year, there was no difficulty in placing them. From the outset the company's operations were successful, and even the intervention of the slump period failed to halt its consistent and ra,pid progress. At the end of its first year. 1930. total assets were £112,586; at latest balancing they had mounted to £1,120.800. From four stores operating in its first year the number has now grown to 18. A Profitable Record. Net profits and dividends have been as follow:— Net Prof. Ord. profit. dlv. div. Year. £ p.c. p.c. J 930 15.505 - 20 lOr.l 19.240 J) 15 1932 30.700 !) 20 1933 42.383 9 20 1934 48.225 9 22J 1935 60.104 9 20 1036 72,787 9 17* 1937 111,461 9 15 Under the National Expenditure Adjustment Act the preference shares are subject to a deduction of 20 per cent. However, in order to keep faith with that section of its shareholders the management arranges at each annual meeting

i that ordinary shareholders shall be given ' the opportunity to vote as a. bonus the amount that has been so deducted. In j this way preference shareholders have j received their full 9 per cent each year. i The latest profit of £111,461 has been declared after allowance has been made for depreciation and providing £74.000 for taxation. After the dividends have been paid and £5000 allotted to the staff provident fund, there still remains £42.210 to transfer to general reserve. Total reserves will then aggregate over £150.000. Balance-sheet Figures. Chief items in the last two balancesheets are as follows:— LIABILITIES. ' 1036. 1937. ] £ £ 1 Paid capital 303,035 015,982 i Reserve of capital profits R. 742 8.742 General reserve .... 86.773 99.929 Profit and loss 38,286 9U.345 Reserve for depreciation 45.24n 76.020 Sundry creditors .... 82 935 80 'MO "il'ik 11.159 — j Deposits 20.000 20.000 ; Taxation provision . . 01,820 120.541 ASSETS. Properties 63.240 133.073 I'urniture, etc 120.540 143 060 Stock 276.685 384 912 Sundry debtors 5.604 45 336 t'usli. etc 3.150 95.138 Inrewtiiients 24.550 14 150 Goodwill 304,229 3041229 To,al £797,993 £1,120,800 Since last balancing the authorised capital of the compifny was increased from £500,000 to £1,000,000 and 222,972 ordinary £1 shares were issued at par. This ( money was obtained to finance the expanding requirements of the coinpanv and the purchase of freehold property at Nelson and Christchurch. The statement of assets gives evidence of vigorous expansion. Properties have increased by over £69,000, furniture and fittings by over £23,000. stock by over £108.000, while a bank overdraft of £11.159 has been replaced by cash and ' liquid credits totalling £95.138. This latter consist* of £68,265 in cash and £26,873 in London credits. Sundry debtors includes £38,186 owing by Woolworths, Limited, and can be looked upon as 100 per cent collectable. The item of goodwill, which is unchanged at £304.229. was increased to that amount from £65,812 two years ago, following upon a revaluation* of the assets. Investment Aspect. ' Shareholders in Woolworths CS.Z.) have had no cause for complaint. ' Dividends and special increments have come along in the style approved in chain store finance. Whenever fresh capital has been needed shareholders have been given first opportunity to augment their holdings at moderate prices that have been weil below market valuations. Moreover, in October, 1933, they received bonus shares ■ to the value of £43,560 (four for five ' held), in August. 1935, £147.015 (three for two), in 1936 £98,010 (two for five), and on these augmented holdings liberal dividends have been paid. The directors now propose a bonus issue of one for every ten held and it is also proposed to reduce the par value of the shares from £1 to 5/ units. The market values the £1 shares at £5 4/6, may seem excessive if based merely on the current dividend of lo per cent and balance-sheet figures. On the other hand if the great earning power of the company and its past record in the treatment of its shareholders are given due consideration the present valuation should be justified.