COMPANY BALANCE SHEETS.

Otago Witness, Issue 3595, 6 February 1923, Page 8

COMPANY BALANCE SHEETS.

NEW ZEALAND LOAN AND MERCANTILE AGENCY COMPANY, LIMITED.

' (*) Profit. (f) Loss. Paid-up capital £2,000,000 4 per cent. First Mortgage Deb. Stk. ... 1,000,000 4 per oent. Second Mortgage Deb. Stk. 700,000 In its latest annual balance sheet, this company shows an improvement on the previous year’s working. On that occasion, after paying the interest on its mortgage debenture stock, there was a deficiency of £16,187. The sum of £IOO,OOO was drawn from dividend equalisation reserve account, clearing it out, and with the help of the balance brought forward from the previous year, the usual 5 per cent, dividend was paid on the preference and 4 per cent, free of tax, equivalent at that time to 5 5-7 per cent, subject to tax, on the ordinary shares. The ordinary share dividend for the past year has fallen to 2 per cent. Adding the preference share dividend, this meant a sum of £70,000 was required, and, as net profits showed only £36,143, reserve had to be called upon to make good the difference. But, whereas for 1920-21 a draft of £IOO,OOO was necessary, the amount in 1921-22, as fur as revenue was concerned, was £35,000. It would have been £55,000 if a dividend of similar rate bad been declared. New Zealand has proved the drag on the year* trading, and the cause of the fall in values. This latter circumstance has necessitated the withdrawal of £65,000 from reserve as a special provision for contingencies. This is in addition to certain provision made last year, the amount of which was not disclosed by the published accounts, but which was met out of contingent reserves accumulated in London. From the directors’ report, it would appear that no such measure is,called for by the Australian results. While reserves have been reduced during the past two years it has to be noted that general administration and office expenses have been also decreasing. A reduction of approximately £30,000 for the 12 months shows that effective measures have been taken in that direction. The tax-gatherer’s hand still lies heavy in view of the lean years the company has passed through. For the past three years the figures are: General ad- Taxes, ministration and British and „„ office expenses. Australasian. Total. 1019-20 ... £328,444 £158,070 £486,514 1920- ... 342,418 101,336 443,764 1921- ... 312,673 88,396 401,069 Before bringing the balance at credit of its trading to profit and loss, the companyfollowing its customary method, has made allowance for ordinary and doubtful debts, but no sum is stated. Seeing that £300,000 of the company’s 4 per cent, second mortgage debenture stock is entered as an asset in the balance sheet, one would have expected to find a crossentry in the revenue account for the interest relative thereto. The liabilities to the outside public—viz., bills payable and current accounts—total £673,688, practically the same as last year, which in turn was considerably less than the previous year’s figure. On the assets side the advances on wool and produce have dropped £179,169, secured loans and other advances £524,678, and current accounts £232,711. The money which has left these employments seems to have flowed mainly to cash and investments, and the position becomes the unique one of holding cash in bank and on short notice amounting to £979;537 and gilt-edged securities £508,203. By the way, this last figure is stated to be £35,000 less than the market value at the date of balance sheet. Thus, it will form a useful secret reserve. Possibly there may bs some large purchase scheme in the mind of the board to eventuate at a near date; otherwise this redistribution of the assets may not be altogether satisfactory from a shareholder’s point of view. The revenue from the asset of £300,000 second mortgage debenture stock, as already mentioned, does not appear directly in the accounts, but forms a deduction from the debits. On the item of premises, £280,290 no mention is made of depreciation written off during the. last two years. As building expenses Have risen, such treatment may be considered uncalled for meanwhile. Merchandise at £144,255 is less than one-half of the figure of June 30, 1920, as was to looked for after drastic writing down. Sundry shares and securities stand at £36,873, with a contingent liability of 20 per oent. thereon. i Speaking generally, the hard times appear to have dealt lightly with the company.

Dividend. June 30, June 30, June 30, 1920 1921 1922 > « £ 723,492 617,305 518,448 £ 'o a p, £ 711,260 495,567 505,212 £© • St £- s s g ■si t g s ? « £ « O * fi 7- ■“ £ p.c. p.c. *121,746 5J 5 tl6,187 4 5 *36,143 2 5