COMMERCE AND FINANCE

Otago Daily Times, Issue 23332, 26 October 1937, Page 7

COMMERCE AND FINANCE

MINING NEWS ARGO DREDGE RETURN A return of 81oz is reported by the Argo Gold Dredging Company, Ltd., for the week ended on October 23. A total yardage of 12,000 was treated for 120 hours’ dredging. NEMONA GOLD DREDGE A dividend (No. 7) of Id per share (free of income tax) has been declared on all the shares in the Nemona Gold Dredging Company. This dividend represents a distribution of £ISOO to the shareholders, making a total of £10,500 paid in dividends since operations commenced in June, 1936. NEW RIVER GOLD DREDGE During the week ended on October 21, the New River Gold Dredging Company, Ltd., secured a return of 41oz from 12,000 yards treated in ICO hours. GOLDFIELDS DREDGE RETURN (Per United Press Association) TIMARU, Oct. 25. The Goldfields Dredging Company’s return for the fortnight ended on October 23 was 21oz 4dwt. SYDNEY WOOL SALES (United Press Association) (By Electric Telegraph--Copyright) SYDNEY, Oct. 25. (Received Oct. 25 at 11.15 p.m.) At the wool sales, 11,343 bales were offered and 9610 sold, while 1881 were disposed of privately. Values for the best descriptions were from par to 5 per cent, above the Sydney closing rates, with other sorts firm. Comebacks and crossbreds were in good request, and realised full late rates. The principal competition came from the Continent and Yorkshire, with good support by local users and Japanese buyers. Greasy merino realised to AUSTRALIAN COMPANIES COMPARISON OF RESULTS A comparison of the results of 77 public companies which issued their accounts in April, May, or June of this year is given in the current circular of the National Bank of Australasia. The table below shows that in the last three years net profits have increased from approximately £3,000,000 to approximately £4,500,000, while the percentage of profits to shareholders’ funds has increased from 5.2 to 6.7: Iftor Iqon 1Q57 Net profit (millions) .. £3 ' £3.6 £4.5 Dividends paid (millions) £2.3 £2.8 £3.3 P.C. of profit to shareholders’ funds .. .. 5.2 5.7 6.7 Grouping the 77 companies into 15 sections, the percentage results of the last three years afford the following comparison:— Percentage of

WOOL AND COTTON Apart from all other factors, the price of cotton has had an effect on wool values. Tor a considerable period cotton has been quoted at over 6d per lb in English currency, reaching 7jjd in March. Since that time prices have receded, and have fallen decidedly in the past two months, me latest quotation being 4 4-sd. An enoi'inous increase has occurred in the world’s codon crop, the world suppiv now being estimated as much in excess of consumption. The cheapness of cotton will probably exercise a check to wool prices, enabling blends of cotton and the sheep’s staple to be freely made in the production of textiles. Whilst that fact is likely to prevent a marked rise in wool prices, it will probably be beneficial in maintaining wool .consumption, enabling fabrics to be produced at very attractive prices for users of them. Cotton differs from wool in regard to development in production. An increased acreage can be sown, and, provided the season is favourable, a much larger quantity can be grown within a year. High prices for wool will probably stimulate production of it, but even if pastoral conditions are favourable, a much extended period is experienced between the period lambs are born and the time they reach maturity as wpol producers. FRENCH BUY FREELY Of late France has been a most active competitor at the wool sales, buying greasy lines freely, write Winchcombe, Carson, Ltd. The revival in her operations for greasy wool at the sales is attributable to the variation in the value of the franc, which is now quoted at 150 to the English £. That fluctuation has given stimulat'on to her exports of mill products. The French Government is also making definite efforts to balance the national Budget, that fact promoting more confidence among French traders.

LOCAL AND OVERSEAS MARKETS

COMPANY BALANCE SHEETS THE NEW ZEALAND GUARANTEE CORPORATION, LTD. Paid-up capital: 1925, £178,022; 1926-33, £214,350; 1934-36, £72,000; 1937, £106,184, General Net Dividend.

The net profit shows a slight increase over last year. The improvement in actual earnings is greater than the net figures indicate, since income tax takes a heavier toll this year The profit before provision for tax was £17,318, as against £13,369 last year; but the necessary provision for tax absorbs £6643, compared with £3972 payable lasi year. The dividend distribution is maintained at 3Jd per share. The interim dividend of lid was paid on the same capital as last year, but the final payment of 2d now recommended is calculated on the increased capital resulting from the issue in April, 1937. The amount distributed for the year will be £8899, against £7OOO in 1936. As the new capital was in use for only about four months and a-half in the financial year, the return to shareholders should be gratifying. The undistributed balance of profit carried forward is £6436, compared with £4661 last year; and this, added to the disclosed reserves, which stand unaltered at £30,099, brings the general surplus to £36,535. This restores the figure to within measurable distance of the 1930 peak; but as the present paid-up capital is approximately half what it was in 1930, the reserve position relative to capital is stronger. The turnover in the way of advances made during the year shows an improvement, the resulting gross profit being £32,492, as against £26,198 a year ago. On the other hand, expenditure under all headings has risen by £4996 to £21,817. Directors’ fees are reduced from £9OO to £BOO, while the general expenses and salaries group ishows an increase of £IO3B. The major increase lies in the group covering interest, taxation, bad debts and depreciation, which is up by £4058. Income tax alone accounts for £2671 of this increase. The relation of aggregate expenditure, including taxation, to gross earnings over the last five years has been:—

1936- .. .. 21,817 32,492 «7.14 The increased business transacted during the year is reflected in the balance sheet, where the asset items bills receivable, sundry debtors, loans and mortgages appear in one grouped total at £259,052. This is an advance of £50,871 over the corresponding figure a year ago. The funds required for this additional accommodation to clients have come largely from the £34,184 of fresh capital contributed by shareholders during the year; but the policy of continuing to use bank finance to augment the company’s own funds is evidenced by an increase of £10,407 in the liability for bank overdraft, which with accrued interest stands at £106,078. The history of the company shows that the directors ai’e fully alive to the advantages of main-: earning an elastic position with the bank. The capital requirements of a finance company of this type expand and contract over comparatively short periods according to the business transacted and the rapidity with which money is lent out and repaid. An elastic bank overdraft, with day-to-day adjustments of interest, avoids any overlapping periods when shareholders’ funds, if provided to meet maximum requirements, might lie idle. The margin between the rate of interest paid for bank accommodation and the effective rate earned by the company on its advances is no doubt sufficiently attractive to commend this method of finance to the directors. The fixed asset property, £18,850, is reduced by £Bl2 from last year, presumably through the depreciation provision for the year, though the amount written off is not specifically indicated Sundry creditors at £2024 are down by £454, while the balances due to shareholders for unclaimed dividends and refunds of capital have been reduced by £385. leaving only £214 still to be claimed. AUSTRALIAN STOCK EXCHANGES (United Press Association) (By Electric Telegraph—Copyright) SYDNEY, Oct. 25. (Received Oct. 25, at 10 pm.) The outcome of the Federal elections had a stimulating effect on the share market to-day. The feeling of confidence was very marked and was reflected in firmer prices in industrial shares, but a cautious attitude was still maintained in base metal stocks pending advices from overseas. MORNING SALES £ s. d.

Profits per Annum to ShareNo. of Companies and Section. holders' Funds. 1935 1936 1937 6 Agricultural and pastoral.. 3.7 4.7 6.2 3 Breweries and hotels .. .. 6.8 7.9 9.6 9 Building and construction 6.5 6.8 7.6 4 Finance—(a) Banks .. .. 2.8 3.0 3.3 3 (b) Trustee 8 (c) Other 4.2 4.7 4.8 Investment 5.6 6.5 7.3 4 Gas and electricity .. 6.3 5.2 5.3 6 Manfrg.— (a) Apparel 5.3 8.8 8.7 4 (b) Foodstuffs 5.1 5.9 7.5 6 (c) Other .. •. 3.7 6.8 8.8 0 Miscellaneous 9.9 8.1 9.4 3 Printers and stationer* .. 6.9 7.5 8.8 7 Retail 9.1 8.8 10.8 6 Transport 5.5 5.3 6.1 3 Wholesale .. 5.2 5.0 11 5.2 5.7 6.7

reserves. p. (ifit. P.ct. Ord. Auq. 31. i a. P.3. p.c. 1330 .. . . .. 30.903 23,203 7 8 1.3 I9.il .. . . .. 20,409 1,110 7 5 5-24 i'm .. , 4.491 7 4 1-G 1933 7,218 5 3-5 3 1-8 1931 19,003 ‘5 3-5 li 1 -9 1935 .. . 5,027 — 8 1-3 I9J6 .. . 9,377 — 9 13-18 1937 .. . 10,675 — 9 13-18 'Prel. capital repaid

Expenditure Grosi profit. Ratio. £ £ p.c. 1932-33 .. .. 15.076 22,294 67.62 1933-34 .. 10.186 29,789 34.19 1934-35 .. .. 12.833 17.861 71.86 1935-36 .. .. 16.821 26,198 64.21

Commonwealth Bonds— 4 p.c„ 1938 102 6 3 4 p.c., 1955 103 6 3 Bank of New South Wales 34 2 6 Tooths 2 14 9 Associated News .. .. 1 3 0 Anthony Hordern 0 19 3 Broken Hill Pty 3 7 0 Broken Hill (rights) .. 1 11 3 Dunlop Perdriau , , 1 2 9 Electrolytic Zinc .. 2 13 0 Howard Smith 1 1 104 James Stedman 0 15 6 ADDITIONAL SALES Bank of New South Wales 34 5 0 Commercial of Sydney 21 15 0 Commercial of Australia 0 17 104 Colonial Sugar 47 7 6 Uniied Insurance 9 17 0 Associated News 1 3 0 Associated News (pref.) 1 3 74 Burns, Philp 2 18 0 British Tobacco 2 9 0 Tooths 2 14 9 Dunlop Perdriau 1 2 74 David Jones .. .. 2 2 (1 Horderns 0 19 3 Kandos 1 4 6 Hume Pipe 1 0 3 J. Feilding 4 8 0 Felt and Textiles 1 17 3 Newbold Brick .. .. 1 15 0 W. R. Carpenter .. 2 7 0 United Provisions 0 7 7 Claude Neon .. .. 2 9 0 Standard Cement 0 17 9 Mount Morgan 0 11 9 Broken Hill Propy. 3 7 0 Broken HilJ Propy. (ex rights) ' 1 10 104 South Broken Hill 2 0 G North Broken Hill 2 17 0 Zinc Corporation 5 7 6 Kuala Kampar i 0 0 Rawang 0 10 9 Placer Development o 11 0 MELBOURNE. Oct . 25. Bonds were firm and industrials genorally irregular and Barriers weaker. £ s. d. Commercial Bank of Australia 0 17 9 National Bank (£5 paid) 7 10 0 National Bank (£10 paid) 14 14 0 Adelaide Steam .. .. 1 12 6 Coles 4 11 9 Dunlop Perdriau 1 2 6 Felt and Textiles 1 17 0 Australian Paper Manufacturers (pref.) Electrolytic Zinc .. •. 1 2 4 12 0 6 Electrolytic Zinc (pref.) 2 14 9 Mount Lyell .. .. 1 18 0 Broken Hill Propy. 3 6 6 Broken Hill Propy, (ex rights) 1 10 44 North Broken Hill 2 6 6 South Broken Hill .. 1 19 9 1 Emperor 0 12 3