A DECLINE IN PRICES

NZ Truth, Issue 1263, 13 February 1930, Page 19

A DECLINE IN PRICES

N..Z. Refrigerating Company, LimitecTs Heavy Losses .(By "Fiat Lux:") A loss of £105,407 for the year's operations to October 31, 1929, as against a net profit of £45,072 for the previous year, is revealed' m the annual accounts of the New Zealand Refrigerating Co., Ltd., one of the oldest and financially strongest meat concerns of the. Dominion.

TN' their annual report to shareholders, the directors state:— "lt will have been apparent to everybody that the continuous fall m. prices which has taken place during" the past year m nearly all the principal products exported by the company could only result m a heavy loss."

A retrogression of £150,479' m one year would have proved fatal to a weak concern, but the report goes on to. explain: "So as we are concerned the losses have to a large extent been minimised by a prudent forward selling policy,, and the stability of our balance-sheet remains unimpaired owing- to the fact that the directors have m the past, by a conservative handling of accounts, made

is left of past reserves for contingencies or what provision has been made m th'e current year's accounts. From the comparative balance-sheet it will be noticed that the item, "Sundry Creditors, etc.," is £602,702, or £218,750 more than the corresponding item m the 1928 accounts, and on the assets side "sundry debtors, investments, consignments unrealised and stocks m works" at £641,472 show an increase of £191,452. The statement of profit and loss accounts for the past six years shows to' some extent the varying fortunes of the concern.

No dividend is being declared m respect of the past year's operations and this is the second time

THE NEW ZEALAND REFRIGERATING COMPANY LTD. Condensed Comparative Balance-Sheet as at October 31, 1929. LIABILITIES ASSETS Capital Paid-up 636,310 — - .' Land, Buildings, Reserve .. 110,000 — Machinery. Plant, Profit & Loss ... 39,103 . t37,15S etc 764,143 f10.020 Shareholdsrs' Secured DebenFunds 785,413 +37,158 tures on Pukeuri _ Freezing- Works 132,500 — Secured B Sundry Debtors, Debentures . . ' 150,000 * — Investments, . - Sundry Creditors . Consignments Advances against Unrealised and shipments and Stocks m Works 641,472 *191,452 Provisional Depreciation of Investments and for ■/ Contingencies ,602,702 *218,590 £1,538,115 »181,432 £1,538,115 »181,432 ♦Indicates Increase, flndicates Decrease compared with 1928.

provisions for such contingencies; and | from such provisions have this year transferred £ 100,000 to the credit of the Profit & Loss Account." In other words the hidden reserves of other years are now being produced. •Owing to the form m which the balance-sheet and annual accounts are published, it is impossible to glean to what extent reserves are created from year to year. N .The item: "Sundry creditors, advances against shipments and provision for depreciation of investments and for contingencies" appearing on the liabilities side of the balance-sheet furnishes no definite information to the reader. Neither does the item "By Profit (or 'To Loss I—in1 — m the 1929 accounts), after making provision for repairs, renewals, taxation and sundry contingencies" convey anything tangible. It is impossible to see what balance

m the past six years that shareholders have had to be content with no return on their capital. With shareholders' funds totalling£7Bs,4l3, apart from reserves for contingencies, the company is still m a strong financial position, but the shares are. at a heavy discpunt, buyers' ideas of value being about 4/10 for the £1 shares (10/- paid-up), and about 10/7 for the fully paid-up £1 shares. The shares have a speculative value at these prices. The company referred to m our last issue under the heading "Investment Trust Coy." referred to the Dominion Finance and Securities Company, Ltd. CORRECTION: — In our review of the Wellington Motor Parking Stations' Ltd. Prospectus m our issue of January 30, the word "expenditure" was Inadvertently printed inßtead of "revenue" m the eleventh paragraph. /