THE WELLINGTON DEPOSIT, MORTGAGE AND BUILDING ASSOCIATION, LTD.

NZ Truth, Issue 1017, 23 May 1925, Page 16

THE WELLINGTON DEPOSIT, MORTGAGE AND BUILDING ASSOCIATION, LTD.

Twenty-fourth. Annual Report and Balance-sheet. "Cambist" has before remarked upon the ; small ideas which prevail m the Empire City. This little concern is one of the small ideas which has lived through good and bad times for the last twenty-four years. Its authorised capital is only £50,000 m £1 shares, arid: at date of this balancesheet: the sum of "ten bob" per share has been paid up. That, of course, leaves a liability 'of ten shillings per share, which perhaps might be (or should be) called up at the earliest moment convenient to the respectable body who are duly incorporated m the company's fortunes. Wellington is a very safe city for the investment of capital. There is no other town where ■ landed property shows so steady an increase m value than m our capital city. This association has the word "building" m its lengthy name, but what building has it . ever done? 'Building costs money for finance arid-materials, als6 work, and what manner :of ■ use can a paid-up capital of £25,000 prove, if once the association tried to push that class of business m a profitable manner? The little concern has, m; this, balancesheet, £66,151 out on mortgages, and t6 "get there" it has had to ; BORROW .ON' DEPOSITS . (with /accrued interest) . £<13,210. ■•To pay for the Panama. Chambers 'it ; has had to raise a mortgage of £ 1250, and it shows on the opposite side of the

, balance-^heet that the value of that property is £7678. With this valuation "Cambist" finds no fault whatever. He considers it a fair one, with every prospect of future increment. This kind of finance seems to him to be cumberous and unnecessary. „A, A call of five shillings per share would have landed this asset into the possession of the company without any pledging of the security. The full ownership of the property would look much better than the equity which the transaction discloses to be the case. One thing that this candid writer must commend the management upon is the fact that there is a reserve fund of £4150, after adding £400 from this year's profits. The reserve, based upon the declared amount of capital, is equal to £16 12s. per cent, on the. paid-up capital of. the company. It has taken twenty-four years to arrive at that position — a matter of saving from the greed of shareholders an annual sum of about £173 each weary year. But it was well worth the struggle. There is a "contingent jreserve" of £ 150, ; and a suspense account of £169. What these are for, the Lord only knows. At any rate, the amounts acre too small to lose any sleep over. Before leaving the balance-sheet; at 'is necessary to remark, that the persons who have deposited their £43,210 with this concern have as security £75,928 of ■;■%

VERY GOOD-LOOKING ASSETS. Besides this, there is the uncalled liability of the shareholders, which is, on the face of the figures, an additional element of security worth £25,000. Adding the two items together, depositors have close upon £101,000 to secure their £43,210, which is as much as any careful person could expect. It is a soundlooking state of affairs. The profit and loss account is well set out. It gives every detail that "one could wish for; it also discloses how small the business volume is. The capital employed gives a net return of only £2 19s 9d per cent, while the return on the paid-up capital is £9 Is 7d per cent. net. Most of the poor results are attributable to the amount of borrowed money employed m the business. Another £25.,Q00 of .'shareholders' money should add £2500 to to the annual earnings. That would encourage more deposits, so that m the long run there would be a greater amount of employed capital with which to earn a larger dividend. The dividend declared is a modest 7 per cent., and if the cheaply-run concern had more enterprise about the premises there is no doubt it could make a better investment for its cautious shareholders. The times are growing into bigger deals and larger operations than Wellington seems to be aware of. Here is a sound basis, at any rate, ' from which to "spring off the mark." , The business is not a risky one. It should be a bigger^ one after twenty-four years. ;