COMPANY BALANCE SHEETS.

Otago Witness, Issue 3854, 24 January 1928, Page 16

COMPANY BALANCE SHEETS.

THE NEW ZEALAND REFRIGERATING COMPANY, LIMITED.

Paid-up capital, 1919-25, £600,000; 1926-27, £636,310; debenture issue, £150,000.

/ It is satisfactory to learn that this company, which, 12 months ago, brought out a deficit on its annual trading, has regained its position as a dividendproducer so effectively as to recommend a distribution of 7J per cent, to its shareholders. To enable it to do so, the het profit is absorbed to the extent of £47,723, leaving a balance of £763 to add to the undivided surplus. The net profit -would have been the highest recorded for seven years, if the balance of the loss incurred in previous years from the interest in shares of the Wanganui Meat Freezing Company, Ltd., had not had to be faced. The sum of £12,103, representing one-third of the book value of the holding, has again been written off, but whereas a similar step in 1925-26 altered a surplus to a deficit, there is sufficient profit left on this occasion to admit of an extra 1J per cent, being added to the rate of the previous dividend declared.

The information disclosed by the printed statement of accounts is of a meagre description. Transfer fees of £43 10s receive special attention, but the rest of the items of revenue and expenditure, except the proportion of the Wanganui Meat Freezing Company’s shares written off, is absorbed under the heading of profit after making certain provisions. The’ figure of £60,546 thus brought out is equivalent to a return of 9.52 per cent, upon the paid-up capital, and would have allowed a material addition to be made to reserves, if the past year’s trading had been alone concerned. Such points as the relation of expenditure to the gross profit, the annual trend of charges, and the provisions for any specified contingencies, do not enter into the statement, although these are matters on which shareholders might expect to be informed. Without knowledge on these and other matters, it is scarcely conceivable they can grasp a true knowledge of the financial position.

The inroad made upon reserves as the result of the 1925-26 trading has not been made good, nor is it likely to be so as long as any extraordinary provision is required to meet losses. Reserve account, at £llO,OOO, is unaltered. The floating balance, increased by £763, brings the total visible reserves to £153,219, or approximately equal to one-fourth of the paid-up'capital. It may be assumed that the group containing sundry creditors, etc., amounting to £388,482, contributes further strength to the reserves,. but it is apparently regarded as prudent to give no indication of their extent. How far any of their liabilities may be interestbearing is not stated. When comparison of the provision mentioned for depreciation of investments and for contingencies, with actual liabilities, like sundry creditors and advances against shipments, is left to the imagination, it is scarcely to be expected that any distinction will be drawn in the composition of the sundry creditors themselves.

The paid-up capital remains at its former figure of £636,310. The further sum of £300,000 is available to be called up in case of need, but it is evidently preferred meanwhile to continue to finance the company by means of secured debentures of £150,000. Although the rate of interest is not stated, it may be taken as something under the average rate of dividend paid during recent years. The fixed assets at £770,872 have scarcely altered. Repairs and renewals have been provided for out of the profits, but it is not stated whether any further allowance has been made for depreciation not met in that way. The sum of £132,500 held in secured debentures over Pukeuri Freezing Works may be added, bringing the total funds employed in fixed property to over £900.000. Excluding those debentures, the relations of fixed to total assets since 1916 has been as follows :—

Apart from the £12,103, representing the interest in the Wanganui Meat Freezing Company shares, the rest of the assets is comprised in one group, containing sundry debtors, investments, consignments unre lised', and stocks in works. Their aggregate is £444,351, which' exceeds the total of the miscellaneous group of liabilities by some £56,000. That information is not much use in itself, and, it may be safely assumed, is not sufficient to satisfy the average shareholder. It is more likely that he would wish to be informed how sundry debtors compare with sundry creditors, consignments unrealised with advances against shipments, investments with reserve account, the amount of money tied up in stocks; and on which side of the balance sheet the bank balance finds a place. An abstract statement of accounts cannot be satisfactory from the point of. view of either management or shareholder.

Oct. 31. General Reserves. Profit. Dividend. Per cent. 1919 ... ... £108,260 £147,940 tl2J 1920 ... ... 114,062 80,802 12J 1921 ... ... 114,789 48,727 8 1922 ... ... 125,773 48,484 «i 1923 ... ... 137,376 49,103 1924 ... ... 159,039 59,163 64 1925 ... ... 159,868 38,329 61 1926 ... ... 152,456 *7,412 1927 ... ... 153,219 48,486 •Loss, tlncluding bonus.

Fixed Total Ratio. Year. Assets. Assets. p.o. 1916-1" .. ... £651,605 £1,713,157 38.09 1917-18 .. ... 800,211 1,914,944 41.78 1918-19 .. ... 913,011 1,410,492 57.64 1919-20 .. ... 852,674 1,386,908 61.48 1920-21 .. ... 912,563 1,437,853 63.46 1921-22 .. ... 933,351 1,176,653 79.74 1922-23 .. ... 778,619 1,078,581 72.19 1923-24 •• ... 777,728 1,285,790 60.49 1924-25 .. ... 755,545 1,481,747 50.99 1925-26 .. ... 771,103 1,519,565 «.74 1926-27 .. ... 770,872 1,359,826 56.69