COMPANY BALANCE SHEETS

Otago Witness, Issue 3662, 20 May 1924, Page 29

COMPANY BALANCE SHEETS

THE DOMINION RUBBER COMPANY (LIMITED). Paid-up Capital £50,000 Gross Net DiyiNov. 30 Reserves. Income. Result. denrl.

Since the restriction of the rubber output came into operation at the beginning of November, 1922, the market price of the product has materially improved. But ■with reduced crop the cost of production has correspondingly increased. The margin on this occasion shows a surplus of slightly over per lb—a great improvement on the year 1921-22. when it was one-fiftieth part of a penny. But if the costs continue to keep as high as llld, shareholders of the Dominion Rubber Company can scarcely expect to receive much in the shape of dividends unless the selling price of rubber rises to a level considerably ebove that of the year, lately closed, artificially assisted as it has been The net result is a profit of £2651, the largest for four years representing a return of 5.30 per cent, on the capital employed. In view of the uncertain position of the rubber industry it was hardly to be expected that there would be anything available out of this return for distribution to the shareholders, and the directors propose to retain it in the business. The charges, excluding depreciation, total to £12,287. This is a few hundred pounds higher than last year, when no income tax provision was necessary. The decrease in the estate expenditure is counteracted by the increase in maintenance and repairs, which in 1922-23 were much below the average. Depreciation is put at the comparatively small figure of £76, and seems to be confined to machinery, tools, etc. R does not appear on the face of the accounts that such provision has been extended to tiie buildings. Among the liabilities the item of debentures is a notable absentee. These, amounting to £2650, were all paid off during the past financial year after being in issue for about nine months. The annual interest burden of 10 per cent, on them thus disappears. Reserve account stands at £lB6 as before, but when the floating balance is ndded, there is an aggregate of £3170, the largest for three years past. Sundry creditors, including income tax accrued, come to the comparatively small sum of £950. The assets stand much as t.hev did 12 months ago. The chief difference is in sundry debtors and cash in hand, which in the aggregate are down some £BOO. Rubber on hand has increased, while general stocks and stores remain much as before. The same may be said of machinery, etc., even when subjected to depreciation. Buildings have increased in value by one-third, hut apparently it has not been considered necessary to write off anything. The item of leasehold property, comprising 80 per cent, approximately of the total assets, .remains at the figure at which it stood when amalgamated with development account. Its valuation may depend largely on the means of access to it, and whether it is clean from the luxuriant growth inseparable from a tropical climate, but in any case it would seem prudent to provide in some manner for its ultimate exhaustion. Some sort of sinking fund, based on tho duration of the lease, appears to he called for. Restricted crop has caused the return Her acre to diminish. The output of 263,7751 b works out at 2981 b per hearing acre. This is low in comparison to the average for the past six years, as will be seen below:—

For the same reason the material reduction m costs that was effected in 1921-22 has been followed by a considerable rise. When for practically the same period rubber has been produced elsewhere at 7d, and even at low as sd, per lb on crops of similar quantities, it will he seen that the rubber selling price must soar to heights more reminiscent of the “boom” days before this company can hope to give to its shareholders a return in keeping with the nature of the investment. If there have been labour troubles during the period under review no mention is made of them in, the report. With smaller crops to gather, and fewer productive estates, there should be an ample supply of labour offering. As trees receive more respite from the tapping knife it is possible the quality of the latex may improve. But the future of rubber meanwhile gives few indications of bettering, and whether or not the possibility of a synthetic substitute has a prejudicial effect upon the market, the price of the plantation article at the present time is quoted as lower than the average figure for the year mentioned above. DONAGHY’S ROPE AND TWINE COMPANY (LTD.). Peid-up Capital, £'33,250; Debenture Issue, £B,OOO. Div. ineludRe- Trading Net ing

The net profit brought out by the latest annuals accounts, £7380, is practically the same as for the preceding year, showing a return of 20.94 per cent, on the paid-up capital. A distribution of 10 per cent, out of this surplus is made to the shareholders in dividend and bonus, 8J per cent, approximately is carried to reserve account, and. the balance is retained in the business without allocation. The usual rate of dividend is thus maintained while reserve receives a substantial addition, and the position of the company is thus further strengthened. The profit and loss account in this occasion reveals no provision for income tax. Under this heading £4BOO was placed 12

montli9 ago. Possibly this ha* been sufficient- to meet- all immediate requirements in that direction. The trading account to the debit* of which is now added the word “charges,” brings out a surplus of £8679. The corresponding figure last year, when the revenue was of similar amount, was £13,762. Thus any saving in income tax for the latest period is neutralised by expenditure elsewhere. The depreciation allowance is £IB7O, which evidently provides for investments as well as buildings and plant. That this matter has been generously dealt with 3 n the first-named is apparent, as tho securities that have been realised have produced mor©' than their book value. Interest received has risen to £922, more than double of what is required to meet the payment of debenture interest. That the debentures have been borrowed on advantageous terms is evident from their rate of per cent. The assets m total stand much as they stood 12 months ago. The stock account is considerably increased at the expense of the bank account, and a transfer has been made from the general investments to those earmarked for the employees' benefit fund. Pook debts and deposits comprise tho largest item at a slight increase which, when bills receivable are added, come to £1633. What proportion is represented by deposits is not stated, but judged from the enhanced amount received for interest, their relation to book debts must be considerably larger than at March, 1923. Land, buildings, and plant, after depreciation has been allowed for, are reduced by £6OO, bringing the reduction for the last two years to £3200, which on the face of it, . looks a liberal allowance. On the other side a renewal account of £6OOO is devoted to this iDurpose. Stock account at the close of 1922-23 was low, and is new nearly doubled, more closely approximating tho amounts or earlier seasons. The general investment account is now at a small figure, having been depleted for the employees' benefit fund. There is enough in the bank account to meet the dividend,, and something more. Although the bank balance continues to be* well on the right side, the management evidently prefers to retain the debenture issue of £BOOO. The lenders can have no objection to this course .when the security is as solid as it is in this instance. Apart from th© debentures, the liabilities to outsiders come 1 , Hl 3€Se have been considerably rei probably owing to lighter taxation. With the addition of £3003 received from s^ 021 ’ 3 Vi'onts, reserves total to . This does not include what is allotted for bad debts, the amount of which is not specified. The general reserve account alone has now reached £15,500, and tho employees benefit fund £5213. It has evidentfy not been judged necessary to add to the latter fund at this time from the I'™.,'- 14 increased slightly under the operation of interest. The equivalent appeais on the other side under investments. Hie proportion of liquid assets to the total AVhG V ir l6d J , sl jS. ntl y during the past year. A* 1 ?® the 4otal some £7OO more, the liquid tho Lw r rgel ' by £l3l °- The position for tho latest five years is as follows:

NEW ZEALAND PAPER MILLS (.LTD.). Paid-up Re- Gross Net with -Mar 31 ° a £ lUl1 ' Se 7 CS - profit- bonus.

The progress cf any manufacturing industry must necessarily be of considerable importance to all concerned in the development of a young country such as this dominion, especially when it deals with an indispensable commodity like paper. A venLiira ot this nature can scarcely be expected to oe attended with uninterrupted and everP™%mr ea Tkl Pd , tllat the Ke w Zealand Paper Mills (Ltd.) has had its uos and downs 18 apparent from the above ‘figuus. Gircumstances over which the management had no control, have during tho latest financial period, seriously impaired the company’s activities. _ bloods and drought have had their restrictive effects, and time lost in tho transfer oil machinery has also played its part. The net profit is consequently the lowest for some years past, representing 5 per cent, approximately on tho capital °Tt would seem that the directors have confidence that recent extensions, when given a fair cnance, will justify their inception, as a final dividend of 34 per cent, is recommended in addition to the interim of the same rate paid in November last. For- the amount by which the pront is overdrawn the floating balance is called upon, and the carry for- “ current year is reduced , i . h ' B . i£> , the first financial year which has had the benanfc of the increased amount of capital for its full per.iod, and it will naturally fie disappointing to shareholders to find a smaller surplus than in the years when the capital was smaller. The gross profit is down £10,212 from the previous 12 months but, owing to a reduction of £6631 in the expenses of management, the difference in the net profit is £3581. Expenditure grouped, it is not indicated where the reduction has taken place, but rates and taxes ore doubtless responsible in some measure. Depreciation of property and plant has been allowed for, and with tbs enhanced value of these assets, the allowance must be expected to increase. r The surplus from manufacturing and trading account, £22,348, is the lowest for several years, and when taken in relation to the capital employed tho diminished return becomes more marked, as is seen below: Manufacturing etc.

Property and plant now stand at £193 194 The additions during the year have raised them by £45,903, and these are reflected" in the bank overdraft of £50,248. In three years the fixed assets have practically trebled. Presumably they have now reached their Ingest point, and under the operation of depreciation they will gradually diminish in value. Their present ratio to the total is 75.17 per cent. .Stocks, etc., remain at much the same figure as in earlier years. In view of extensions and curtailed output, it would not have been surprising if they had been larger. Sundry debtors when combined with bills°receivable come to £17,713, a decrease of £2974 from 12 months ago. Against them has to he placed the bad debts reserve of £SOO. Sundry creditors, the tax collector included, show £5946. To these has to be added the liability to the bank of £50,248.

This sum is approximately equal t-o the unissued capita. The question may arise as to whether it might net be more to the advantage of the company to subscribe the money, unless this position is only temporary, and get the benefit of the large sum required for interest. The only reserve account that has altered during the past four years is staff fund which has increased by £957. Neither the general reserve non the plant reserve has been added to. The total reserves now come to £38,901, a decrease of £2666 from March, 1923, due to a 7 per cent, dividend being recommended for the year. It seems a pity that the accounts are not drawn so as to exhibit the actual result for the working period, seeing that this is the chief point of interest to shareholders. TAUPIRI COAL MINES (LTD.). Paid-up Capital, £141,000. Year Coal Net Piv.

The latest report issued records the results of the semi-jubilee year of this company. Whatever may have happened in the earlier stages, the four most recent years show a uniformity in their figures that must be gratifying to the management and shareholders alike. In 1922-23 the net profit made a move upward which has been followed for this occasion by a return to the former level. Indeed, the three other years produce a striking similarity. For 1923-24 the net surplus of £11,628 is down by £972 from the previous year. The preference and ordinary shareholders receive their customary div'dends ot 8 per cent, and 71 per cent, respectively, and £IOOO is transferred to accident- reserve fund, leaving a balance of £2052 to carry forward to the current year. The net return works out at 8.25 per cent., as against 8.91 per cent, the previous year. There has been a considerable falling away in the profit on coal account, compared with the three preceding periods. Whether this due to industrial disturbances checking production or to some larger allowance being required for depreciation the report does not disclose. The difference is not as marked when tiie net- result is reached, as in the chief items of expenditure—vix., insurance, and rates and taxes—the saving aggregates approximately £4OOO. Some increase in income has been effected by interest on investments, while the amount £997 entered for, general expenses on the other side can only be characterised as low. The fixed assets at £123,879 ars practically* the same as last year after provision for depreciation. They form 72.08 per cent, of the whole, a greater proportion than 12 months ago. The relative position latterly has been as follows:—•

Whatever the lifetime of the mines may be, the reserve held against their ultimate exhaustion would be expected to increase, if anything more rapidly now at the end of 25 year 3, especially when the company is enjoying an era of comparative prosperity. The liquid assets consisting for- the greater part of investments in war loan and mortgages and debentures, show a surplus of £44,248 over actual liabilities, as against £43,178 12 months ago. While this is satisfactory, it is considerably under the increase effected during the previous financial period, which was' not aided by any reduction in taxation, it should be noted that the bank balance appears among the assets for the first time for some years. The outside liabilities come to the moderate sum of £3782, half of that of 12 months ago, which in turn was half of that of the period preceding. Accident reserve has been auguruented by £IOOO swelling the total reserves to £18,052. As these have increased 50 per cent, in the years just finished, the years to come, if given a continuance of the present prevailing conditions, may he looked to for an appreciable addition. Capital account shows no alteration. The fact that preference shares stand to ordinary shares in the proportion of one to six gives the former a sound security, which is combined with a rate of 8 per cent. Meanwhile, the holders of ordinary shares with less substantial security have to be content with a lower rate. If that rate keeps at its present level, they should have no ground fof complaint.

£ £ £ • p.c. 1918 ... 5,525 16,228 169f 1919 ... 5,671 28,012 6,396* m 1920 ... 4.102 21,6.10 631* 5 1921 483 ft,674 3,616t — 1922 518 12.287 32* — 1923 ... 3,170 15,014 2,G51* — ♦Profit. iLoss.

Tear. Return Total Expenses per acre. Crorexpenses. £ per lb. lb. 1b. d. mi 7-18 ... 44 7 237,050 15,740 15.933 1918-19 ... 428 200,782 20,770 16.629 1919-20 ... 447 313,208 10,565 14.990 1920-21 ... 277 104.004 12.624 15.617 1921-22 ... 493 345,027 12,003 8.347 1922-23 ... 298 263,776 12,287 11.17!)

Mst. 31, serves. Charges. profit. profit. bonus £ £ £ £ p.o. 1920 ... 19,709 33,011 10,808 4,809 10 1921 ... 19,992 45,697 14,603 3,778 10 1922 ... 93,501 42,140 10,011 5,064 10 1923 ... 25,626 38,252 14,782 7,554 10 1921 ... 29,699 43,048 8,870 7,380 10

Year. Asse its. Liquid. Total. Ratio. 19201921- ... 1922- . £45,057 , 52,077 47,101 50,652 £73,031 79,111 74,045 80,036 61.64 p.c. 66.07 p.c. 63.60 p.c. 70.00 p.c. 1923-21 . 57.065 81,649 70.09 T).c. In process of that the liquid time, it looks not unlikely assets may absorb the whole.

-uay, 01 , 1010 ... a 04,775 £ 13,815 £ 55,387 £ 16,052 V 1026 ... 04,775 34,220 49,038 24,8S1 10 1021 ... 04,775 41,214 49.988 16,472 10 1022 ... 1023 ... 123,006 150, GOO 40.765 41,568 27,074 32,601 7,721 11,131 1024 ... 150,000 38,001 22,388 7,550 7

1018-19 1919-20 account. Capital. Ratio. ... £64,334 ... 47,063 £ 94,775 94,773 57.33 p.c 40.66 p. o. 50.71 p.o. 1920-21 ... 48,004 94,775 1921-23 ... 25,353 122,006 20.78 p.o* 21.38 p.c. 1922-23 ... 32,067 150,000 1923-24 ... 22,348 150,000 14.90 p.c

ended Reserves. account. profit. Pref. Ord Mar. 31, .-e £ £ p.o. p.o. 1921 ... ... 12,101 29,347 11,752 8 1922 ... ... 15,173 30,881 11,747 8 n 1923 ... ... 17,099 30,878 12,600 8 74 1924 ... ... 18,052 25,011 11,628 8 n

Year. Fixed n^sets. Total assets. Ratio. 1920-21 .. £1 & 1,608 £175,916 74.81 p.e 1921-22 ... 131,207 183,192 71.62 p.c. 1922-22 ... 123,997 174,731 70.96 p.c. 1923-24 ... 123,879 171,909 72.06 p.c.