FACTS FOR INVESTORS

Greymouth Evening Star, 25 June 1932, Page 4

FACTS FOR INVESTORS

N.Z. PERPETUAL FORESTS PROGRESS OF BOND SCHEME HUGE FORESTS CREATED Unique in the economic life of the Dominion has been the establishment and development of New Zealand Perpetual Forests, Limited. Formed in 1923 for the purpose of selling forestry bonds-, the promoters displayed the unusual combination of almost unbounded ambition with a rare talent foi organisation and keen administration. As a result very extensive sales of bonds, were made, not only in New Zealand and Australia, but also in (Great Britain. The company’s success resulted in quite a number of enterprises being floated to exploit various projects on similar lines. Thus besides smaller forestry ventures there have been bond issues of tobacco, sugar and tung oil projects. In redent years there has naturally been a slackening off in the rapid progress that was made in the sale of the company’s bonds from 1925 to 1930. but the selling force has been consolidated and the organisatiofl to-day is remarkably efficient. An instance of the far-reaching nature of the company’s. operations may be gauged from the fact that during the last twelve months arrangements-have been completed for selling the bonds in France. During the year ended March 31 the value of the net sales of bonds amounted to £127,533, and this brings the total to the substantial figure of £3,660,IG7.

In connection with the expenditure of -bondholders’ funds, the company has planted 132,096 acres, chiefly with pinus insignis trees, and these have already taken on the appearance of vast and imposing forests that cover the hillsides in various parts of the Taupo and Atiamuri districts. How the bonds have been sold and how forest planting has been carried out year by year is seen in the following table: —

In his annual address to shareholders, the chairman of directors, Mr. W. Fraser, stated that when the current season’s planting has been carried out the area dealt with will exceed 148,000 acres. Bondholders who put their money into this venture, were told in the first place that the forests they were financing would be ready for realisation in from 15 to. 20 years’ time They were guaranteed by the company that the trees would be planted and properly maintained, and as further security the company was under obligation to hand over to trustees £8 (5/8 for every full paid bond. The 'company’s accounts show that the portion relating to cash deposited with trustees has been complied with and a visit to the forests is sufficient to convince any bondholder that planting and maintenance have been faithfully performed. About a hundred million of trees have been planted and established, hundreds of miles of first-class roads have been laid down through the properties, together with an extensive system of fire breaks. The growth of the trees has been astounding. Mr. Fraser naively informed his shareholders at the meeting referred to that it was fortunate that the marketing aspect does not need immediate consideration at this particular period. Meanwhile the trustees are .making a thorough study of the marketing problem so that when the trees are sufficiently matured their realisation plans will have been perfected. That the company has done well out of the sale of these forestry bonds is apparent from the following table: —

At the annual meeting the chairman notified that a scheme was in course of finalisation by the directors whereby each shareholder would be allotted some portion of the company’s spare .land, planted with trees, and thus become definitely interested not only in dividends but also in the realisation of the forests. This is in,the nature of a bonus.

The financial position. of the company is of the utmost importance not only to shareholders but also to bondholders, who must depend upon the company for completion of the planting and maintenance operations. The following particulars, therefore, are of especial interest: —

Balance-sheet items as at March 31. ■LIABILITIES. £ £ 1931. 11)32 Capital 190,813 197,536Forfeited share reserve 135 135 Creditors, secured and unsecured .. ‘.. ’93,115 72,523 Reserve for planting & maintenance ~ 1,106,015 1,055,114 Special reserve .. 5,000 — Profit and loss A/c. .. 17,718 26,370 £1.118.827 £1,352,011 ASSETS. Land .. .. 131,517 118.616 Goodwill .. .. 15,900 Plant, implements and furniture .. 11,107 11,737 Inventories — Tools. seeds, trees, etc.. 12.911 12,786 Maintenance reserve funds .. .. 521,151 5,89,479 (Held by . Trustees for Bondholders and Invested in Trustee Securities.) Investments .. .. 46,085 151,924 Debtors .. .. 44,005 25,210 Bondholders . . 605,846 432,665 Banks and cash . . 25.268 ' 9.537 Total £1.418.826 £1.352,014

The chief interest in, the above figures centres around the reserve for planting and maintenance. It will be seen that this totalled at March 31, £1,055,444. Of this, £589,479 is the amount chat has been handed over to trustees. Besides this the company held in the shape of investments £151,923, while the item £432,661 represents amounts that are constantly maturing under the instalment system which is a feature of the bond contract.

Summarised, the position appears to he that the compaiv’ has carried out its contract to bondholders. Huge forests have been established and are growing rapidly under scientific man-

agement. The next question the bondholders will ask of the company will be, “What shall we do with our trees?’’ A satisfactory answer to this query must rest in abeyance in the meantime. VALUE OF FORESTRY. PLANTING WASTE LAND “Forestry is the most profitable branch of industry I know of at the present time,” observed Mr. J. N. McLeod, N.H.D.. of Christchurch, in the course/>f an address on the aims and objects of the New Zealand Institute of Horticulture given in the Masterton Municipal Lecture Hall recently. He went on to substantiate his view by stating that 38 years ago a large area of waste land, mostly shifting sand, near Christchurch, had been planted with trees. One acre of it had recently been cut and milled, and the financial profit of the one acre had amounted to £4BO. Mr. McLeod added that the wood-pulp industry could be developed very considerably Pinus insignia -was very suitable, and the trees could be turned to account when they were about twelve years old. There were great possibilities in the tree-planting industry. Millions and millions of pounds were being lost through the apathy of people who were living near sand dunes and failed to take up forest planting schemes.

Year Value Land Land ended Bonds purchased. Planted. March sold. Acres. Acres. 31. £ 1925 486,100 52,401 9,733 1926 .. 1,012,825 3,035 44,922 1927 665,525 99,046 27,824 1928 419,728 386 23,302 1929 562,995 658 10,862 1930 307,749 —• 1,410 1931 77,712 32,340 2,433 1932 127,533 — 11,740 Totals - 3,660,167 187,866 132,126

Net Div, Ileceipts. Expenses. profits. £ p.c. 1929 .. 562,821 545,153 18,050 8 1930 .. 320,249 301,375 18,874 8 1931 . . 310,912 295,092 15,821 8 1932 . . 285,296 246,101 39,195 8