HUGE PROFITS

Grey River Argus, 24 June 1925, Page 7

HUGE PROFITS

THE SUGAR BUSINESS. 1N T'E RI .OCKED INTERESTS The (’(denial Sugar Refining Company is one of the great controlling Indies in Australian finance. Dr RL. Faithful, one of its directors, is a director of the Bank of New South ’ les, and of the Perpetual Trustee Company of New South Wales, Ltd. 11. E. Kater, a member of the Legislative Council, is a director of the Couimercial Banking Company of Sydney, Ltd. Mr O. E. Friend is also a ! director of the same banking company, on the board of which he is a.-soeiated with George Judah Cohen, chairman of the United Insurance Company, Ltd., and :i director ot Tooth and Co., Ltd., as a director of Ciioiseul Plantations Ltd., and Solo. imon Islands Development Company, Ltd., he is associated with the directors <«f Burns, Philp and Co., Ltd., ‘and Washington H. Soul, Pattison amt [Co.. Ltd. On the board of the United Insurance Company, Ltd., Ito is again associated with G. .1. Cohen, million. iaire, ami also with T. Buckland. of [the Bank of New South Wales, Per. j muiiviil d'rustei 4 Companv, and lilt {Son, ami Badgery, Ltd. In Pitt. Son, hind Badgery, Ltd. Mr O. E. Friend, who is also a director is associated with Sir (K. MacKellar, M.L.C., ol the Mutual Life and Citizens Assurance Co., Ltd., and with F. B. S. Eal_ Kiner, another millionaire, anl also a director of the Bank of New South Wales. In the Permanent T'rustce Companv of N.S.W., Ltd., he is asso. (‘i.ated with E. N. Yarwood, of the Aus■r: iian Bank of Commerce, and the Newcastle Wallsond Goal Company, \ ii>; raiia n capitalism centres, in fact, .around two great groups, of v I'ich one is the C.S.R..Burns, Philp g;oup. while the other revolves around lii.’ Broken Hill Proprietary Company, The hall'.yeaily profits of the Colonial Sugar Refining Company. Ltd., an- stated at 35 J«7', breaking alt IriH-ords of this abnormally profitable j<-on<-ern. Added to the profits of the ISeptember half-year, this makes £760,_ 1 653, or £90,014 more than the regular Ir.rodis of th l year ending March 31, )’!>'!. At Hie same time, the replace 'be. uf and depreciation fund —a camou. tlaged reserve —has increased by £b>s,6SO, as against £105,002 during the preceding year. The total revealed profits are, there, fore. £92(i.3.'1.">. not far short ot' a round million for the year. On the nominal caoital. this is 19 per ('ent. Upon the Jc.idi actually paid in by shareholders, lit is over 3X per cent. Upon the capital which has been returned • shareholders, it is 2.'!:’ per cent, and upon the balance returned lo shareholders, over and above what they in vested, it is 59 per cent. :e comnanv was established in • 555. and registered in New South Wales in LSB7, when it took over the assets of the Victoria Sugar Company and the New Zealand Sugar Company. Its cap’tal was then £600,000, and its debentures £900,000. By 1914 it had distributed £5,435,600 in dividends, and £525,000 in bonus shares. The sh: reholders had paid up £2,425,000, anl were receiving a 12A per cent dividend on £3,250,000, or 16 per cent of their total investments, which had been spread over a term of £0 years, and. in effect, twice repaid out of dividends. The reserves of the company stood at £500,000, the assets being stated in the balance-sheet at about half market values. Th* directors then decided to cull iia'f of the undertaking by a different 1 a I!?. A new company was formed, valu’d the Colonial Sugar Refining Co npanv (F iji and New Zealand) Ltd., which took over the assets of the j old company in Eiji and New Zealand. I Tii * capital of the new company con_ .sisted of £250,000 'ordinary shares, held I I ■■ ’c old company, and £3.250,000 in I preference shares, which were distril billed among the old shareholders, i Although the Fiji and New Zealand (assets no longer appeared in the bal_ !a io e.sheet, the old ( onipany showed jthc same capital and reserves as for. •'luorly. Whence, then, came the capi.tai of the new one? To the extent of .3.250,000 it came from a writing.up (of the assets of the old. I 'i'hc Fiji company had a separate exi -u <•))(•(' from 1915 to 192 1, its profits .during this period being enormous. In : '920. the old company returned £6,50.000 capital to its shareholders, and in 1921 the Fiji company returned £1,625,000, with a cash bonus of £203,125. In 1925 the same com. pai.y, in process of liquidation, returned a further £1,625,000, with a further cash bonus of £350,000, making a total of £278,125 in excess of its total '•apital. In 1924 the shareholders were compensated for the loss of their shares in the Fiji company by £1.025,00(1 bonus capital from its surplus assets, and £650,000 from the assets of the old company. Their account as regards capital alone may be shown thus: —Cash subscriptions, £2,425,000; bonus shares to 1914,

£B°s 000; bonus shares in T iji company, £ 3 ’>sonoo ; bonus shares from tion of same, £1,625,000; " shares, £650,000; total issue, £5,,,;.,000. ], ess returns from Parent eomp’any. O.aOOOO; from Fiji company-, £l,6—>,oot . total, £3,000,000. Balance, being present capital, £4,875,000 which is more than twic; the amount invested and is worth two and a half times its face value. The returns of capital, then, amount to £3,900,000, or £1,475,000 more than the total eash invested irrespective altogether of dividends amounting £5.435,600 prior to 1915, anil £4,216,37a between 1915 and 1924, and of eash bonuses £528,125. A further halfyearly dividend last year eamc to £243,750 and £304,687 will complete the total for the year ending March 31, 1925. Thus, in return for £2,425,000 in cash subscriptions spread over «'i number of years, the shareholders will have received £3,900,000 in returns of