COMPANY BALANCE SHEETS.

Otago Witness, Issue 3714, 19 May 1925, Page 44

COMPANY BALANCE SHEETS.

THE! MUTUAL LIFE AND CITIZENS’ ASSURANCE COMPANY (LTD.). Paid-up capital, £200,000. '• • Payments to Year ‘Reserve Total {Profits policyended funds. income, divided, holders.

* Including balance on accident account. f Excluding bonuses to account policyholders The dimensions of the figures that are shown in this company’s printed accounts after an existence of 38 years speak well for the system under which is conducts its operations. Although the word “mutual” appears in its designation, shareholders provide a capital of £200,000, the agreement being that in the with-prefit branch of the business, policy-holders are paid 80 per cent, of the profits, and the shareholders retain the balance of 20 per cent. Ab shareholders are doubtless to some extent also policyholders, and as several of the company’s staff are to found among them, the personal interest is ever present, and serves as a stimulant to forward the progress of the institution to the advantage or all concerned. The total income for 1924 comes to £2.295,232, over £IOO,OOO above that of the previous year. It proceeds practically entirely from three branches—Ordinary, Industrial, and Accident. The first-named produces the bulk of the increase, some £75,000, and the industrial busines a is responsible for about £34,400. The accident section does not give the same proportionate results, but its income is steadily mounting all the same. It is still premiums that provide the larger portion of the income, their ratio to interest and rents being about the relation of two to one. Interest and rents, however, are slowly gaining upon the other, as the following figures show: Interest Premium

The tendency will be for the margin to continue to diminish in the future. Taking the ordinary branch, the premium income jjtands to claims for the past three years as under:

The net expenses of this department havo varied exceptionally little during the period. In this respect they come well short of tho industrial department which, with half the premium income, shows net expenses amounting to 30 per cent, higher. The premium income in all branches is moving upwards. The reserves have been decreasing owing to the diminishing balance on the accident branch. The totQl of £132,144 includes £IB,OOO earmarked for a policyholders’ bonus reserve fund which, along with a general reserve of £67,682, has stood unaltered during ths past few years. The item of £124,715 represents claims outstanding at the close of tho financial year, a smaller sum than might be expected considering the toial claims doalt with during that time. Sundry creditors stand just under three millions, less than they were 12 months ago. and are mainly attributable to the industrial branch. The assurance funds have been swollen by £642.706 since the previous balancing date. On looking at the other aids of the balance sheet, it will be ssen that thia increase is

to be found in Government and municipal securities and loans to public bodies. The aggregate of theso is £15,585,316 or 87.97 percent. of the total assets. These investments are spread over the Australian States, New Zealand, United Kingdom, and Canada, aud it is interesting to note that the return on the whole of the invested funds for the year came to £.» 6s Id per cent., and a higher rate by 2s 5d per cent, than for 1923. Leans on policies are next in magnitude with £1.036,753 or 6.13 per cent, of the total assets. They are up by £79,677 and with an expanding business are likely to continue to grow. Loans on mortgage form the large sum of £597,358 although more than £200,000 under their figure of 12 months earlier. The holdings of shares and debentures in other companies are practically the same, while freehold property is down some £6OOO. A concern that has the control of funds that now amount to over fourteen million pounds, after a comparatively short lifetime, holds out a prospect of attaining to great proportions in its maturer years. WRIGHT, STEPHENSON AND COMPANY, LIMITED. Paiil up De!*enturo Net Dividend Capital. Stock *Beserve3. Profit. Prof. Oril.

* Apart from sundry debtors’ reserves. A gross return of 7.35 per cent, last year on the paid-up capital has been increased on this occasion to 8.32 per cent. With the fixed rate payable to preference shareholders, who own about 46 per cent, of the total shares, an addition of 2 per cent, could havo been made to the rate of the ordinary dividend and still left a balance to carry forward similar to that of twelve months ago. The management has preferred to retain tho money in the company’s business rather than increase the shareholders’ distribution. The floating balance in consequence has been increased to a figure only some £4OOO less than the sum paid away in dividends, and reserves have been cone spondingly strengthened. From the profit and loss account there is little to be learned. Employees’ extra remuneration appears as a now item, but as usual no figures are given for the different times specified. The net profit on trading has risen from £39,302 to £45.125, an increase of £5323. Extonsive purchasing has evidently been dealt in during tho year, and the stocks on hand show more than two and a-half the value at which they stood at the beginning. The proportion they now hold relativo to the profit would mean that a reduction of 8£ per cent, over all would wipe out the surplus for the period. Expenditure has apparently not all been in the direction of stocks as the fixtures have been materially increased. Depreciation has been duly provided for, but whether it covers both properties account and machinery is not stated. Freehold and leasehold properties are up £17,587 and have now touched a quarter of a million pounds. Machinery has risen nearly £2O,(XX) in spite of whatever may have been written off for depreciation. The addition to the fixtures during the latest two pears have resulted in their rising nearly £IOO,OOO. In point of value, Sundry Debtors take first place among the assets. Compared with March, 1923, they have varied little and, when the special reserves are placed against them, amount to £1,135,100. This is less than they were a year ago and the diminution is more marked when bills receivable are included. Provision has been made for bad and doubtful debts and in an aggregate of such proportions, a liberal one seems to be necessary. Much depend? on the units under this heading—whether the amount is composed of sums fairly evenly spread over, or if a few large items form the bulk of it. It is stocks, however, that show the greatest alteration. They havo leaped from £200,981 up to £533,422. This increase can scarcely all be attributed to meat, which on this occasion makes a first appearance as one of the component parts. With a sum practically equal to the paid-up capital locked up in this form, the resources of the company must be severely taxed unless it is likely to be readily, and for the most part, speedily realised. It is gratifying to see that the word “etc.” no longer is entered under this heading. The more liquid among the assets, as might be expected, are considerably reduced. With money flowing out and consolidating in fixtures as well as swelling tho stocks, cash on deposit has disapjieared altogether, and cash at bankers has crossed to the liabilities side. Shares in other companies remain almost intact in amount, while a useful reserve is still maintained with the New Zealand War Loan StocK at a valuation of 83J. Reserve plus the floating balance is £101,828. an increase of £11,500. With practically the whole portion of reserve represented by the book value of a gilt, edged security, a value which is well exceeded by its market value, the company is strongly placed in this respect. It is noticeable, however, that no move has been made in recent years to devote any part of the profits towards augmenting reserve account. When bills payable Are added, sundry creditors exceed one million pound?. This is an indebtedness larger by £118.317 than a year ago. and can be traced to the heavy increases in fixture? and stocks. The liability under debenture stock continues to rise, although its upward trend is not so marked. A new class—second lien terminable 6 per cent.—has been issued to the extent of £9900. Otherwise there is little change. Tho perpetual 5 per cent, debetiture stock amounts lo some £100,900 more than the full preference sharo issue and the holders of the latter receive a return of A per cent, higher than the holders of the former. Tho second Lien Terminable debenture stock of £128,675 carries 7 per cent., the snmo n.? the dividend to ordinary shareholders, but is subject to tax. It, looks like the intention of the management, to pursue a progressive policy, and, given a continuance of nrices of the stijple products on something lilte last year’s basis, such n prooodure would seem to bo well warranted. TAUPIRI COAL MINES (LTD.). Paid-up Capital, £141,000. Coal Net Dividend.

by a similar process during the year lately closed. The printed report makes no leference to this feature of the-Recounts, which may he duo to wo:k interrupted by industrial trouble, although it has increased to such an extent as to constitute a ground for inquiry. The return which had varied little during t.be years immediately preceding l.ia been reduced since March,' 1923, by one third. The effect is not so noticeable on the net profit, which during the same time has only dropped bv alxuit or.e-tenth. This adjustment is brought about by a general curtailment oi charges. Rates and t.’.xes are the chief factor, and under this heading the company bus been relieved of a substantial portion of that burden. Insurance has been brought down to less than one-half of its old figure, and this, taken in conjunction with the diminishing subscription to the coal miners’ relief fund, indicates a lessening output. The revenue from interest is mounting up steadilv and produced over £IOOO. Some rearrangement has been made in the matter of reserves. The income tax provision lias during the year yielded up £2OOO lo the accident reserve, and these two funds now stand at £BOOO each. At thia time no transfer is recommended from vofits to increase the accident reserve. The floating balance is, however, augmented some £SOO, bringing the total reserves to £18,556 — a sum which docs not bear a high proportion to the capital employed. The amount of depreciation which has been allowed is not stated. Fixtures are less by £I2OO, or about 1 per cent. They are entered in one group, and with varying expectations of duration of life and quantities not stated, it is impossible to say whether the allowance is sufficient, but if the additions during the year have been few, it looks small. Comparing the fixtures with the totfil assets gives the following result—viz.: Fixed Total

The lifetime of the mine is the all-important matter, as once the working of the pits has ceased the buildings, machinery, and plant are not likely to be of much value. Investments amount to £29,365. This is approximately £I3OO lower than 12 months ago—a result that is probably caused hy realisation instead of depreciation. The difference is in the mortgages and debentures, as New Zeaalnd war loan remains the same. The last-named appears at the round figure of £12,500, but whether it ’.a taken at its nominal or its market value is not stated. With regard to the revenue from interest, it is noticeable that the increase of the past few' years is not due to larger investments held. Apparently it has arisen through a reduction in interest charges, which has given an addition of £SOO in two years to interest received. The bank balance as a year ago, appears among the assets. The sum of £15,312 is represented by sundry delators, an item which is smaller at each successive balancing aate. The net profit for the year, £ll,lßO, admits of the usual dividend of 7£ per cent, to the ordinary shareholders and 8 per cent, to the preference. For the period under review the ordinary shareholders are benefiting by their distribution being divided into two equal instalments, with a six months’ interval between. The preference shareholders, drawing 8 per cent., look well protected with a surplus of liquid assets over outside liabilities of £41,423. Their preference extends to the rate of dividend, but how they stand otherwise to the ordinary shareholders is regulated by the articles of association. The company's existence is dependent on a wasting asset against whose ultimate exhaustion no special provision appears, and the members may do w-ell to keep thia point before them when they receive their dividends and deal with the disposal of them.

Dec. 31. £ £ £ £ 1922 .. 151.344 2,125.538 517,616 1,103,800 1923 .. 135,830 2,183,741 £80,279 1,102,296 1924 .. 132,144 2,295,232 590,673 1,147,066

Year. and rents. income. Ratio. 1922 .. £658,458 £1,466,609 44.89 p.o. 1923 .. 682,085 1,501,265 45.43 p.c. 1924 .. 742,G95 1,552,112 47.86 p.c.

Premium Claims, Year. income. etc. Ratio. 1922 .. .. £968,812 £910,436 93.97 p.c. 19211 .. .. 969,694 898,184 92.61 p.c. 1924 .. .. 992,796 920,018 92.67 p.c.

Mar. 31. £ £ £ £ p.c. p.c. 1021 635,746 365,154 94,813 29.584 5* 7 1922 536.410 400,829 86.406 25,392 5J 7 1923 538,114 4i)!),828 83,152 30.091 n| 7 1924 541,889 546,268 90,378 39,809 5* 7 1925 543,082 ' 556,093 101,828 45,134 5* 7

Reserves. account, profit. Pref. Ord. Mch. 31. £ £ £ p.c. p.c. 1931 . . 13,101 29,847 11,752 8 74 1923 . . 16,178 80,881 11,747 8 74 1933 . . 17,099 80,876 12,600 8 7| 1924 . . 18,063 26,611 11,628 8 74 1925 . . 18,666 30,613 11,180 8 7| Tht shrinkage reoorded in the annual grots profit 19 months ago has been followed

Year £ Assets. £ Ratio p.c. 1920-21 .. .. 131,606 175,916 71.81 1921-22 .. .. 131,237 183,192 71.62 1922-23 .. .. 123,997 174,731 70.96 192124 .. .. 171,909 72.06 1924-25 122,671 167,376 73.29