COMPANY BALANCE SHEETS.

Otago Daily Times, Issue 19261, 27 August 1924, Page 6

COMPANY BALANCE SHEETS.

THE WELLINGTON WOOLLEN MANUFACTURING COMPANY (LIMITED). Year Paid-up Gross Dividend, ended capital. Reserves profit. X’- 0. £ £ £ June .in, lain... 115,350 70,2*6 69,nil in in June 30, 1920... 149.830 94,136 86,824 13 13 June 30, 1921... 1.79,932 98,025 81,924 15 15 June 30, 1922... 200,000 90,725 82,773 14 14 June 30, 1923... 200,000 92,896 83,051 14 14 Juno 30, 1924... 249,470 * 56,000 71,177 13 13 ‘Approximate. A drop of 1 per cent, has taken place in the dividend for the year 1923-24, but this is duo to an increase in the paid-up capital, instead of to any reduction in the net profit. The gross return is £71,177, the smallest recorded for five years, and if the expenditure had been on the same plane at that of 1922-23, the net result would have been appreciably affected. Considerable reductions have, however, been made in the chargee, especially in the group containing rates and taxes, and, when this saving is added to enhanced rent and transfer fees, a net profit of £31,586 is brought out, being some £1464 higher than the previous season, and, with the exception of that for the “ boom'” period of 1919-20, the highest recorded in recent years. When compared with the capital employed, the return is not so favourable, being 2.4 per cent, lower than, that of 1922-23, as the figures below will show;

The dividend paid would thus havo exceeded the actual profit if the new issue of capital had ranked for dividend for the full period. The profit and loss account is slightly more abridged on this occasion, and the figure for rates and taxes is not stated separately. When included with other charges, there is a total reduction of some £10,500. The other group mentioned shows a similar movement, the combined effect being to reduce the total charges by approximately 25 per cent. This more than counteracts the largo shrinkage in the gross profit and enables the balance transferred to appropriation account to exceed that of 12 montlis ago. The fixtures have been materially augmented during the year, and now stand at £233,685. Additions have been made to the buildings, plant, and fittings, the value of which since June, 1920, has almost doubled. Possibly owing to the fact that so largo a proportion of the property is of recent acquirement no corresponding addition has been made to the allowance for depreciation, which continues at the same annual figure of £SOOO, and now represents about 2J per cent, on the total apart from the land. The stock is" not far short of quarter of a, million pounds. _ It is the largest asset, and its growth during the 19 months was remarkable. Higher value as well as larger quantities will play their part. It has almost reached the high-water mark of three years ago without producing a proportionate return. From a perusal of the stock figures in recent years, it is noticeable that the gross profit is highest when the stock is lowest and conversely when the stock is hic-h the gross return is low. 0

The item of sundry debtors (£53,408), including bills receivable, remains about the same. The amount duo have gone up some £7OO, and the provision for bad debts and discounts some £IOO. It may thus be assumed that there lias been a further strengthening in respect of the allowance for bad debts The New Zealand Government Inscribed Stock is responsible for £13,585. As this represents a valuation of S 3 per cent, on the. nominal sum invested, there is a good margin here and a useful reserve in tbo event of realisation. It is hypothecated to the extent of £37,660 for mortgages raised almot entirely during 1921-22. During the. year a further issue of capital lias been made —20.000 ordinary shares of .£5 each. Not only were these offered to shareholders at par in proportion to their holdings, but a sum of £2 per share was'allocated out of reserve, leaving £3 payable, of which 10s has been called up. These shares have practically all been taken up, and the capital now ranking for dividend has been increased 25 per cent.

As the result of the above issue reserves were depleted by one-half. Out of the year’s surplus £IOOS baa been transferred to the general reserve, and. with fire insurance remaining about the same, tho aggregate is lower than for some years past. Like depreciation, the fire insurance reserve has not grown proportionally to the value of the fixtures.

The heaviest liability is to the hank. This may be traced to the large stock o,nd the additional capital expenditure. If the overdraft of £161,330 at tho date of closing represents a fair average figure, the annual charge for interest must be considerable. Sundry creditors make up the balance of tho remaining liabilities, and at £51,183 closely approach tho amount of the sundry debtors. Tho balance sheet is laid before tho shareholders in its usual clear and comprehensive manner, enabling tie position to bo grasped without difficulty.

Year Paid-up capital. Net profit. R at<s £ £ Te r cent 1918-19 . 115,350 29,403 25.49 1919-20 . 140,830 36,521! 24.38 1020-21 . 170,932 28.848 16.03 1921-22 ■ 200,000 19.404 .1 70 1922-33 . 200,000 30.122 15.06 102:1-24 . 249,470 31,58(5 12,86