DIFFICULT YEAR

Dominion, Volume 34, Issue 111, 4 February 1941, Page 3

DIFFICULT YEAR

Wellington Investment Co. TAXES EXCEED PROFITS

lu his address to shareholders at the annual meeting of the M ellington Trust, Loan and Investment Co., Ltd., yesterday, the chairman, Air. J. J. Reich, said total receipts for interest, rents, etc., showed a reduction of only £265, and this, added to the increase of disbursements in the profit and loss account of £1375, accounted for the fall of £1640 in the net profit. Deposits due by the company were £1541 lower. Mortgages were down £7270, and fortunate sales of several tenanted houses, which had fallen into the company’s hands some years ago, and could not be dealt with satisfactorily owing to the Rent Restriction Act, reduced the item "freehold properties’’ by £6028 to £2999. Bank balance was _ £4613 in credit. Compulsory war loan instalments amounted to £3017. and there was still £1293 to pay in March. Profit and loss appropriation account balance available was £2598 lower than last year. Deposits Restricted.

Although deposits were down £1541, thia was not because there had not been 'deposit money offering, but was the result of restrictions under the finance emergency regulations. The Minister of Finance last .June, on the representations of the various companies, agreed to modify these restrictions by limiting deposits to two-thirds of the amount of first mortgages held by investment companies. _ "On this basis we applied for a limit of £250,000, which was under two-thirds of our mortgages at that time and much below our deposits for the past 25 years, which had averaged £300,000. To our surprise, we were only allowed a limit of £207,000, which is insufficient for our business, and is only 541 per cent, of our mortgages instead of the promised 67 per cent. Naturally the contraction of deposit money has resulted in a limitation of our ability to make money available to borrowers, and as a consequence our mortgage investments are also lower. "This position is, however, not entirely due to the restriction of business above referred to, but is in part attributable to the fact that the company has had to set aside nearly £10.600 during the past year for income and national and social security taxation and compulsory war loan contribution. The fact that they had been able fo find this large sum of money without unduly upsetting the earning capacity of the company, demonstrated the soundness of its position." Heavy Taxation.

Despite these difficulties, the gross earnings were only £265 less than those of last year. The amount absorbed for taxation was higher than the .amount of net profit, which was not so satisfactory, but could be borne during the war, thanks to the strong reserves. The directors- had this year charged in the accounts as a debit against ibe profit and loss appropriation account the amount of taxation estimated to be payable by the company in respect of profits for the year under review. For this reason it had been necessary to show theamount for two years’ taxation (1939 and 1940) in the figures for 1940. This had drawn heavily upon the balance in profit and loss appropriation account, and to meet the situation an amount of £6OOO had been transferred from the general reserve, thereby reducing that reserve to £BO.OOO.

The directors had decided to recommend a 5 per cent, dividend for the year, instead of the usual 5| to 6 per cent. “I trust.” said the chairman, “shareholders will accept the position in the spirit of the times. Sacrifices in one form or another are expected from all. and we must carry on until victory and peace have been won, and relief is given from the heavy burden of taxation, and normal trading conditions are restored.” The report and balance-sheet and dividend recommendation were adopted. Dr. C. Prendergast Knight and Mr. J. ■T. Reich were re-elected directors. RESERVE BANK Sterling Funds Higher The sterling exchange funds of the Reserve Bank of New Zealand on Monday, .January 27. stood at £13.3.i9.439. a further increase for the,week of £1 .< >14.9; >O. The bank’s overseas assets at £13.347,203 showed an increase of £1.019,823. The note issue totalled £21,524.947, a further decrease of £106.539. Advances to the State Marketing Department at £3.241,162. were higher by £22.847. while advances to the State for other purposes remained unchanged at £23,690,000. The statement of assets and liabilities as at the close of business on Monday, January 27, is as follows: — LIABILITIES.

1. General Reserve Fund 1,50(1,000 0 0 2. Bank Noles .... 21,824.947 10 0 3. Demand Liabilities — (a) State ~... 7.974.512 13 10 (b) Banks .... 14.329.525 0 o (c) Other .... 1,346.344 6 4, 4. Time Deposits .. — — 5. Liabilities in Currencies other than N.Z. Currency .. 12,236 S a 6. Other Liabilities — 1,038.759 2 7 £(N.Z.)48.026,325 1 7 ASSETS. 7. Reserve —- £ 8. d. (a) Gold exchange . 2,801,876 0 0 *(b I Sterling exchange 13,359,438 19 5 (c) Gold exchange . --— 8. Subsidiary coin .... £>(,414 1J 11 9. Discounts—(a) Commercial and agricultural bills . (b) Treasury and local body bills 10. Advances—(a) To the State or State undertakings : (1) .Marketing departnmnt 3,241,161 11 8 (2) For other purposes 23,690,000 0 0 (b) To other public authorities .... (c) Other 11. Investments o,i <o,._>•••> Jo o 12. Bank buildings .... 0 .,_ . 13. Other assets 1,10a,807 1- 4 £(N.Z.) 48,026,325 1 7 in N.Z. currency. Proportion of reserve (No 7 less No 5) to notes and other demand liabilities 35.512 per cent., compared with 34.01 per cent, on January 20. The reserve on January 27 amounted to £16.149,079, compared with £15.129 242 on January 20, an increase of 11.01. ,831. A year ago the reserve was £11.013.8-6. Sterling exchange on January -i totalled £13,359,439. compared with £12,344 489 on January 20, an increase of £1,014,950. Liabilities in currencies other than New Zealand currency totalled £12,236 (a decrease of £4873), thus making' the bank’s net overseas assets £13.347,203, compared with £l2 327 380 cm January 20, an increase of £1,019,8-3. A year ago the hank’s net overseas assets totalled £8,717,984.. The gold holding amounts to £2,801 ,b<6, an increase of £l4. Subsidiary coin at £57.415, shows an increase of £364. Advances to the Stale Marketing Department total £3,241,162, an increase of 847 A year ago these advances stood at £3.741,917. Advances to the. State for purposes other limn marketing remain unchanged at £23.690.000. A year ago they totalled £21.010,000. Investments remain unchanged at £3,770.596. Other assets amount to £1.105.838. a decrease of £5157._ Tlie nole issue on January 27 totalled £21.824.917, a further decrease of £106.539. A' year ago the note issue amounted to £15.3i4,456. Demand liabilities to the State amount to £7,974,513, an increase of £788,132. The trading banks’ reserve balances total £l-1,329.525. a decrease of £253.169. Other demand liahililies at £1,346.3-1-1 have increased bv £562.130. Other liabilities total £1.038.759. an increase of £17,538. The statement balances at £15,024i,32u, an increase of £1,032.918.