COMPANY BALANCE SERRTS

Otago Witness, Issue 3768, 1 June 1926, Page 31

COMPANY BALANCE SE RRT S

DONAGHV'S ROPE AND TWINE COMPANY (LTD.),

* Including bonus. During the past four seasons the net profit figure has not varied by as much as £4OO. The outcome of the latest year’s trading is a net surplus of £7506, exceeding its two predecessors,and almost touching the high-water mark of 1922-23. Out of this return of 15.97 per cent, the distribution to shareholders is restored to 10 per cent, in dividend and bonus. With the view apparently of raising reserve account to the round sum of £IO,OOO, an addition is made to it of £3250. This being more than the year’s profit can stand, the accumlations brought forward from previous years have to make good the shortage of nearly £450. Goods account shows a credit of £55,055, the largest since 1921. On the other side is expenditure amounting to £42,988, which, although up, compares favourably on the whole with preceding years. The different items in the group are specified without the respective figures being given. In the profit and loss account, however, the amounts provided for Government taxation and depreciation appear. The former at £3OOO is double the provision made 12 months earlier, which looks as if the previous allowance had been understated. Land, buildings, and plant at £22,884 are lower than they have been for some years. The depreciation of £1564 entered in the profit and loss account refers entirely to plant. On the total valuation, the allowance approximates 6£ per cent.,' showing either that land and buildings occupy a comparatively small part of the total or that the allowance for deterioration of plant is a liberal one. Expenditure charged to capital during the period has been small. The liquid assets have been swelled by some £5500, and have more than regained their former position in the balance sheet. Since 1919, their relation to the total has been as follows—viz.:

Stock account has been slightly reduced to £24,098, indicating that its substantial rise during 1924-25 has' been more than temporary. In its relation to the revenue from goods’ account, its increase of recent years has been most marked as will be seen below

There is still, however, a considerable distance to be covered before all the trading profit is contained in stock. From its nature, depreciation is not likely to operate heavily on this asset. Book debts amount to £14,580 after allowing for discount and deducting bad debts reserve. This is lower by about 50 per cent, than the figure they stood at a few years ago The bank account gives a substantial balance on the right side, and would seem to provide ample working capital in the meantime. The investments account fund held for the benefit of employees has grown to £5636, some £IBO larger than it stood at the beginning of the year. If this money is all invested it looks capable of earning a larger revenue than the above difference, which is ’ower than that for the preceding 12 mqnths. Sundry creditors are not heavy when inclusive of provision for Government taxation, they amount to £6343. Reserve account alone now amounts to £IO,OOO, which is retained practically entirely in the business There is a further reserve in plant and building renewal account, which remains at its old figure of £6900, equivalent to 26.22 per cent, of the relative asset. With the employees’ benefit fund standing at the same figuie as its special investments account on the other side, the companv is well provided for in ~ this respect. When such is the position within two years after dividing £11,750 among the shareholders in the form of fresh capital, its financial strength is evident. NATIONAL MORTGAGE AND AGENCY COMPANY OF NEW ZEALAND (LTD.). raid-up Capital: 1918-20, £200,000; 1921-25, £250,000.

The net profit for the year that closed on September 30 last exceeds that of the previous financial period by nearly £7OOO, and practically regains the ground that was then lost. The return works out at 16.04 per cent., which compares favourably with the 12.24 per cent, previously recorded, ana shareholders benefit in the additional surplus by 1J per cent. The distribution m dividend and bonus—three-fifths under the former and two-fifths under the latter—is 12J per cent., the highest since the paid-up capital has rtood at its present figure, and absorbs £31,250, representing a larger division than in the days when the paid-up capital was £200,000 and a return of 15 per cent, was made. No allocation has been made of the balance of £6351, which goes to swell the accumulation.

General < barges which had been cut down until in 1922-23 they totalled £61,472, are beginning to creep up again, and are larger by almost £2500 Land and income tax at £9205 is materially reduced, and is less than a quarter of the burden of four years ago. Debenture interest (£41,773) makes a heavy demand upon the gross profit, but its rising tendency of a few years ago seems to have keen now checked, and the past season shows

a still further decrease. The gross revenue maintains an excetpionally even courae, the variation since 1922 being under £2OOO, after special provisions have Been duly made. Among the liabilities, there is a sum of £790,965 in debentures and loan that may be regarded as definitely interest-bearing. How far the general group pf £512,087 adds to the total iu this respect is not ascertain able, but will depend largely on the extent of the bank overdrafts. The group covers actual indebtedness, reserve for contingen cies and “eto.,” which give it a wide sphere, and make it impossible to gauge at what figure the actual liabilities stand. Bills payable are responsible for the large eum of £74,641, but, when taken in conjunction with the general group, the aggregate is short of that of September, 1924, owing to a reduction in obligations to customers and in bank overdrafts. The debenture money is borrowed apparently at the moderate rate of 5J per cent., and when it is considered lhat there is a total of £761,965 under this heading, or rather more than three times the amount of the paid-up capital, the advantages to the company are obvious. Reserves exceed £310.000, of which reserve fund constitute £290,000. On this occasion, as on the previous one, an addition to reserve fund has not been recommended, and considering its relation to the paid-up capital —ll6 to 100— there does not seem much need for any. The floating balance, however, is steadily growing, and use may be made of it in the near future for a transfer to this oi some other reserve fund. There is a further reserve among the miscellaneous* liabilities, but its extent is a matter for conjecture. The debts due to the company aggregate £1,320,223. The main portion i 9 held in loans on mortgage, secured accounts, and property held amounting in all to £864,391 Since their great rise in 1920-21, this combination has been reduced appreciably, the past roar alone showing a drop of over £BO,OOO. Its relation to the total assets has been as follows:

The above reduction ha 9 been somewhat couieracted by the rise in current accounts which have reached £422,236. Although this may seem large, it is just about half o! their total of five years earlier. Before arriving at the gross profit, allowance ha 9 been made for bad and doubtful debts Advances on wool and produce are now con siderably curtailed.

Stocks have risen to £275,824 following their upward movement of the past few years Whereas formerly the stocks might be closely on a par with the gross profit, the growing tendency of late for them to exceed the other is becoming more pronounced The auditoi9 - report appended to the balance sheet makes no direct reference to stocks

Investments in London and New Zealand are valued at £275,327. This is almosi equivalent to the reserve fund and must provide a useful addition to the income The rest of the cash assets consist of money in bank and on hand—£4B4B. Apparently at the time of closing the books, there was no reason to hold money invested that was re payable at short notice.

The fixed assets at £84,046 have risen con siderably in proportion to their aggregate Depreciation has been duly allowed, but it is not clear whether this takes the shape of actually writing down the book value, or building up a reserve on the other side of the balance sheet. In either case their figure probably does not represent their present market price, and tlieir comparatively small contribution to the total assets is a further indication of the solidity of the company.

Paid-up Tear i Capital : 1920-24, £96,260; 1906-96, £47,000. Trading Net *DiTl•nded. Reserves. Charges. profit. profit, dead. Mar. SI. £ £ £ £ p.o. 1930 ... 19,700 S3.014 10,898 * 4900 10 1931 ... 19,962 45,697 14,693 S778 10 1933 ... 21,501 42,146 10,011 5064 10 1931 ... 25,626 38,262 14,782 7554 10 1934 ... 29,599 43,948 8,879 7980 10 1935 ... 21,047 42,500 10,842 7189 9 1936 ... 24,036 42,988 12,067 7505 10

ASSET? Liquid. Total. Ratio. Year. £ £ P-c. 1019- ... 45,057 70,001 61.64 1020- ... 52,077 70,111 66.97 1021- ... 47,161 74,045 63.60 1022- ... 56.652 80,936 70.00 1023- . 57,065 81.640 70.00 1024- ... 53,500 77.774 68.90 1925-26 ... 50,197 82,081 72.12

Stock. Goode account. Ratio. Year. £ £ P-c. 1020-21 ... 10,985 - 60.395 33.00 1921-22 ... 13,191 52,200 25.27 1022-23 ... 8,130 53,189 15.20 1923- ... 15,198 52,814 28.78 1924- ... 25,477 53,342 47.;G ... 24,098 55,055 ' 43.77

•Reserves. Grose Net Dividend cum General bonus, ch’r'gs. Sept. 30. £ £ £ p.c. £ mis ... 271,813 156.651 38,222 15 75,532 1919 ... 280,753 169,896 38,940 15 69,260 1920 ... 297,941 203,172 47,188 15 84,371 1921 ... 294,988 145,224 49,605 10 72,355 1922 ... 291.631 188,125 21,643 . 10 65,803 1923 ... 301,863 155,416 38,356 Hi 61,472 1924 ... 304.348 156,124 30,611 Hi 62,864 1925 ... 310,700 • Excluding t Loss. 157,380 37,601 12$ contingencies reserve. 65.309

mortgage, etc. Total assets. Ratio Year. £ £ p.c. 1917-18 ... 526,238 1.612,666 32.63 1918-19 528.065 1,688.772 31.27 1919-20 530.822 2.003.518 26.43 1920-21 ... 1.009.880 2.103.844 48.00 1921-22 ... 1.052,318 2.007.036 52.43 1922-2.'! 983,603 1.943,086 50.62 1923-24 .. 948.137 1,957.910 48.43 1924-25 864,391 1,960,268 44.10