Northern Steam Ship Co., Ltd.

NZ Truth, Issue 416, 14 June 1913, Page 4

Northern Steam Ship Co., Ltd.

This is a purely Auckland Company! and its operations are mostly confined to the North end of New Zealand. Its fleet of steamers dodge m and out of many, of the small ports and inlets which abound on our Northern coasts. In many respects, the districts ' served by this company are solely dependent upon its service, for the outlet they require for produce and passengers. The company has just completed its thir-ty-second year. Someone, has sent "Cambist" -itheir balance-sheet for review. It is a typical document of the "hugger-mugger" kind. % ."Cambist" gets weary of such affairs, and must confess they do. not inspire him "with any . great- esteem for. the common sense of New Zealand shareholders as" a body. In. the first place, this document is called a "report" and balancesheet. It is labelled, "FOR PRIVATE DISTRIBUTION ' AMONG -SHARE-. HOLDERS ONLY." . Then, as we shall see shortly, the bald and wretched contraption of a report gives no information of particular, value :to the shareholders. It. is just such a report as one would expect /to emanate from a secret society, which'did not like the wholesome' light of , day on, its affairs. Surely the; shareholders ;vvhp entrust their money, and the business of the company, to a body of directors, and paid servants, deserve something more informative than this meagre perfunctory report.. 'The company -owns a fairly .large fleet of vessels, gdod, bad, and indifferent; \but not one word is given about the condition of the fleet. There are also wharves, sheds, .gear and office premises of sufficient values to show depreciation of considerable amount, no ! matter how well they are looked after. Time and use are, always doing their work. What is -valuable today, may become rotten or useless the next; but this precious report does not deign to consider it proper to enlighten the shareholders one jot on such vital matters. The "report" is sufficiently private to raise feelings of suspicion m the minds of shareholders; to say nothing, of others into whose hands it*, may fall. There is a bald statement that "The net profit on working account for year ending" March : 3i, after making provision for insurance,' depreciation and boiler and •repairs account, is £11,118 18s Bd." The dividend recommended is at the rate of 7 per cent, per annum, which absorbs . £11,298 17s— an amount £ ISO m excess of. what >the company declares has^ been earned. On the face of this, /it appears that the company, has strained itself considerably to achieve a very moderate return of profit to its shareholders. Time will, of course, eventually prove whether. this iS justified. Looking back, upon' the history of this concern, one feels dubious about the optimistic spurts. Its balance-sheet reveals enormous liabilities which would point to the wisdom of most conservative methods m dealing with profits. This "report," saris much vital information, looks as if the directorate dealt with the distribution m 'an extremely prodigal manner, and that it -had -'no thought for the morrow." . MORE MONET IS PAID OUT TO THE SHAREHOLDERS THAN • \W AS EARNED IN THE YEAR. Of course, there was £1768 17s at credit of profit and loss on April 1, 1912, but then there is, only £1607 13s Sd to commence with on April 1, 1913. In other words, you cannot have your cake and eat it. Probably this feature is desired to be kept "private,"* bin "Cambist" thinks such finance should be criticised. The shareholders should not be' stifled by a 7 per cent, return on their : money. They should probe around for reasons for such' a policy. They should anxiously run their eyes over every vessel, every wharf, every shed, the gear, and etcs;, • and compute the respective values thereof. But, if on finding the values of these •several items sufficiently close to those given m the balance-sheet, they should interest themselves m the earnings of the large fleet of vessels now running with the white funnels.' The directors, apparently, have private information on these points, but they have not enlightened the "shareholders only." If these important recipients of 7 per cent, are not worthy of such information, well, the general public have no right. to cavil at the report "for private distribution among shareholders only." THE DAY IS PAST FOR SUCH METHODS. The "hugger-mugger" period should be done away with. The Bank of New Zealand became rotten because its proprietors were doped wtih dividends, which were never earned. There was no information for shareholders m the bad old days; but they woke up sharply when told "all was lost but honor." Directors are apt to become arrogant by reason of office. They treat shareholders and the public m a stand-oft manner, which is rat*er painful. It is a habit which has a strong hold m Auckland company affairs. It is injurious to all the best ethics of business and enterprise. For that reason, "Cambist" always comments upon it when noticed. It is found m the "report" that three directors retire, and offer themselves for re-election. The auditors do the same. Apparently no' fresh blood is offering, as no new names are mentioned. Perhaps it would bo useless for any outsider to attempt to gain office m this very "private" concern. Another common feature — there is no list of the directors on this Board. They are so modest that they do not care to have their names attached to the. attenuated secret "report" for private distribution. YET IT IS A MATTER OF PUBLIC CONCERN TO KNOW WHO ARE THE DIRECTORS. Every well-conducted modern company, especially those whose credit can stand inspection, always prints on the annual report a list of the directors' names. There is, therefore, sound precedent to follow, and this company ignores a salutary policy by withholding this information. If it is an oversight, then it betokens careless preparation, if nothing worse. Nowadays, all sorts of people become directors of public companies, quite regardless of any fitness for the 'position. We find haberdashers, whisky-sellers, mining sharks, • booksellers, etc., playing "guinea pig" on the Boards of Banks, Insurance Companies and Harbor Boards. But we like to know their names, i, Tho balance-sheet shows a paid-up

capital. 6f £161,412 2s 6d, m. 104.2&9 shares paid to 7s, and 172,291 shares fully paid to 14s 6d. The company can .issue 23,420 more shares, according to the limit at present authorised. There is a callable amount of 7s 6d per share on those paid to 7s. This equals £ 39,108— and no doubt it is , being financed on In order that the company can incur "sundry liabilities" to the tune of £44,556 10s 2d. Does this mean pawning the^calls to the bank for security of overdraft? There is no mention of a bank overdraft, but to whom do they owe the £44,556? Anyway, the company is much m debt: Shareholders would like to know what sort of creditors they have. There should be something more than "Sundry Liabilities oC the company." A hard creditor might enforce the 7s ,6d. call, which means: pay up £39,108, and ' look unpleasant. The largest asset is ; £223,449 16s, consisting of vessels, -whar- j yes, sheds, and sundry, gear, fess amount at credit of depreciation account. This is all lumped together, so, much is left for speculation. First, how much is there at credit of depreciation account? Why does the company not write oft! depreciation, and have done with it? These secret credit accounts are a nasty feature. Why not show them m the balancesheet? "Why not separate the values of vessels from the other properties? The company has £4600 m the United Repairing Company investment. \ jhis does not appear from "report" or profit and loss account to be returning any profit. Neither does the investment of £200 m Auckland Harbor Board debentures. In regard to the latter item, of course, 1 such an assumption is absurd.. We know that Board is solvent, and paying its interest. The confusion arises from 1 the manner m which the accounts are set out. Everything is lumped together, and no proper details are available for shareholders. Why should this company invest £4600 outside its business, while it is so short of funds itself that sundry creditors aihount to £44,556? How comes it that £17,456 0s lOd is owing to the company? A large sum for agents and others to be having on 1 the books. Why should so much "tick" be given, and to whom? Is it Auckland merchants who owe the money? This transport business should be ron a strictly cash basis. •It must cost ' the company a considerable ' amount m m- • ter'est charges. There are reserves for insurance, boiler, repairs, etc., totalling £48,705 8s 3d, which is a commendable feature. The contra appears to be m vessels and other assets exceeding amount of paid-up capital. It is a pity such interesting facts get smothered up. It is good to be abje to follow them closely. They are not fully disclosed. ' ; The profit and loss account^ Is a model of secrecy.' The totals only amount to £12,906 10s Bd. Now, this company must turn over enormous sums of money annually. If it desires secrecy m the profit and loss of its business, it might let shareholders, have a revenue and expenditure account, showing the income and expenditure for the year. Possibly, >the concern handles £200,000 to £300,000 per annum. It might be more. Yet the profit and loss totals only £12,906 10s Bd. If the shareholders are contented with this sort of thing, they are of an exceedingly trusting character, a feature which "Cambist," from long experience in s these matters, is totally devoid of/ This valuable business, with all its ramifications through the North, can surely afford to set its affairs m a more informative manner to its shareholders, as well as the public at large. Let us wish it success for the current year, and hope that these gentle strictures will be taken to heart.