WESTPORT COAL COMPANY, LTD.

NZ Truth, Issue 1103, 20 January 1927, Page 13

WESTPORT COAL COMPANY, LTD.

Condensed <Balance Sheet, September 30, 1926.

NOTE.—* indicates increase and t indicates decrease- compared with last ' year's figures. **Does not include £64,116 of accumulated interest.

made m the profit and loss account for all bad and doubtful debts. This provision is, of course, no more than one would expect m .a soundly managed concern such as the Westport Coal Co., Ltd. •■-..'•''' ' Stocks on • hand are valued at £30,263, which is an advance of £3264 over the previous year. Whilst the amount seems small m, proportion to the size of the company's operations it is higher than for some years past. •■ No doubt very conservative, estimates of values are applied as is the custom m many prosperous concerns. Bills receivable at £5578 are £2866 greater than previously, but at this amount are about the usual average total. . v Loans to workers for the purchase of houses total £4886 having been reduced during the year by, £1395. In 1923; the amount outstanding was over £10,000 so that m the three intervening years over £5000 has been paid off. y The provision by the company of necessary money to enable workers to own their own homes seems to this writer an outstanding example of prac-' tical politics well calculated to cement that loyalty which the workers have always shown to this company. . Investments and loans at £299,597 show an advance of £13,989 for the period. ' ' , ' . . The sinking fund account totals £123,750, having been increased during the year by a capital accretion of £5000. .' :.■:. Evidently the £64,116 of interest earned by this fund 'to date is not for some reason or other, brought to account m the balance sheet and therefore forms a secret reserve of £ 64,116. The total of the liquid assets contained m these three items is £487,46. and the creation of these investments is due to a conservative policy rather than to any legal necessity, y » "WASTING" ASSET 'The company, is working what is known' m accounting parlance as a "wasting" asset. Interpreted freely this means that the company spent its capitalyn acquiring coal m the ground. Therefore every ton of coal won anO sold represents 'a:lessening of the company's capital asset. 7 . ■ ■ If the well-established principle that dividends can be paid only out of profits has to be followed, by companies working timber, gold, coal and similar wasting assets it would be necessary to calculate and set aside the capital value of each 100ft. ; of timber, ounce of gold or ton of coal so that shareholders' original capital should be available for return to them when the timber, gold or coal rights were exhausted. Jn actual practice such a neces* sity would involve an enormous amount of intricate calculations which would depend for accuracy upon the measure of reliability which could be placed upon the original estimates of the, qualities of timber, gold or coal contained m the concession when purchased. Obviously such .estimate could not be proved until, the concession was exhausted. ; -

count, the gross earnings for the year are stated to be £88,733, being an improvement of £7529 compared with 1925. •-.'■'',. . ' . . /■ To this sum has to be' added, the balance brought forward .from 1925 and amounting to £12,699 making a total of £101,432.The expenses of management amounted to £41,102 being £9486 m excess of 1925T ; It is necessary, however, m this connection to state that 1925 was- a record year for low expenses according to the published accounts. . The figures for the four years to date being: 1923, £75,422; 1924, £63,055; 1925, £31,616; 1926, £41,102. . y In addition to the expenses of management for the year under review, the only other outgoing was '£924,' being the company's contribution, to the. accident fund established .under, the Mines Act. These deductions left £59,406 available for division without taking into account the year's interest on the sinking fund, amounting to £7461 which is apparently not brought into tire accounts. 7 . '-..'" THE DIVIDENDS This' balance was disposed of by paying interim and final dividends totalling 10 per cent, and absorbing £45,000, transferring £1000 to the Employees' Guarantee and Providend Fund and carrying forward the balance •of £13,406 to the 1927 accounts. In addition to the 10 per cent, dividend, however, shareholders received a further •2% per cent, by way of bonus from the insurance, fund which is m a, particularly strong position. As having some bearing upon the company's prospects it is of more than passing interest; to find that the output for the first. 'ten months of each of the' past three years shows a steady . increase. ' . ' .'■; The company's .shares are at i present quoted at about __ 1/14/---and whilst at this figure they are a little high; when compared with; the company's net assets the return of 12/2 per cent, dividend is . equal to over 7J/£ per cent, on the .market price. r The company is m a very sound position. • >" „ While there Is nothing sensational m" its prospects its shares appeal to this writer as a really good industrial investment. ■

LIABILITIES .£■.£:■ Capital paid up , ..450,000 .■ ': Insurance fund . .: . ;' 128,460 -*9710 Profit, and loss . . . 36;906 t3918 .ShareholdersV. funds 615,366 *5792 "Sundry liabilities . . 258,380*24,500 £873,746*30,292 _

ASSETS - £ £^ Property .."• ••• 291,974 *11,880 Debtors .. '„. 79,388 * 5442 Stocks .. ■'•..•' 30,263 * 3264 Bills receivable .. 5578 * 2866 Loans to workers. . 4886 f 1395 Investments .. 299,597 *13,959 Sinking- fund** .. 123,750 • 5000 Gash ... .. 38,310 t10,754 £873,746