COMPANY PROGRESS.

Otago Witness, Issue 3898, 27 November 1928, Page 16

COMPANY PROGRESS.

WELLINGTON MEAT EXPORT COMPANY, LTD.

♦ Fifteen months. f Loss. The past year’s results of this company have been awaited with interest, as they are the first indication of its progress for a period of 12 months since the merger with the Wairarapa Frozen Meat Company, Ltd. The net profit of £9501 is some £BOO in excess of that of its predecessor. It is sufficient to pay the preference shareholders their 8 per cent, and leave a balance of £2530 to add to the undivided brought forward. Holders of ordinary shares for the fourth successive season receive no return. If’ it was expected that, as one result of the amalgamation, the trading return would steadily increase, such hopes have been disappointed. There is a fall of some £4OOO in the gross profit from that of 1926-27. On the other side, however, there has been a cutting down of expenditure. Including a depreciation allowance of £BOOO as against £2OOO 12 months ago, the total charges come to £20,779, a reduction of over £5OOO on paper but in reality a reduction of about £ll,OOO. The directors’ report is silent regarding the quantity of stock treated and makes no comment concerning the general progress of the company, such information being reserved no doubt for the annual meeting. The noticeable feature in the profit and loss account is the absence of mention of discount and exchange. Last year these items aggregated with interest a sum of £15,059, whereas in this instance interest amounting to £3871 alone is entered. General and management expenses are grouped at £7898, or something similar to those of the prior year. A comparison of charges with trading returns since 1918 is as follows:—

Land, premises, and plant are entered at £236.884. Notwithstanding the depreciation allowance of £BOOO, they have risen over £9OOO during the year indicating that capital expenditure on a failscale has taken place. The depreciation allowance covers works, properties, and plant, but as the values of these respective assets are not stated, it is not clear whether the wastage allowance may be regarded as adequate. Twelve months ago it was considered expedient to allow £2OOO for motor vehicles alone, and, if that amount represents an average annual allowance, the balance left on this occasion for buildings, machinery, and other plant cannot be regarded as excessive, seeing that no provision in their direction was made at that time. Among the liquid assets, consignments of £107,656 occupy much the largest place. This is a considerable advance on their figure of September 1927, and may be taken as an example of a growing business. In this connection the drafts against shipments and Home agents’ balances, which amount to £98.508, have to be taken into account. The balance sheet totals are considerably increased by the inclusion of these two items, although the margin between the pair is comparatively small. Stocks and stores at £42,056 are down to about three-fourths of their figure of a year ago. The report states that stocks of meat, wool, etc., have been taken into account at a very conserva-

tive value, a course which probably accounts for the diminution of values, more than any reduction in quantity. Sundry debtors (£23,497) are also down. Again, no mention is made of , bail and doubtful debts incurred or allowed for. There has been a reduction in the ordinary liabilities. Loans on mortgages have increased to £9OOO. but sundry creditors, by falling to £33,453. and* the bank overdraft by falling to £18,025, have jointly contributed to reduce the indebtedness by approximately £23,000. As an interest-incurring item, the smaller bank overdraft should correspondingly, affect the charge for interest, and possibly the' reduction in sundry creditors may act similarly so as to nullify the extra cost for loans. The one visible reserve is the undivided surplus of £8753, which is being carried forward to the current season. It is too early to show how things are going to shape as the result of the amalgamation, but, until the depression on the frozen meat industry lifts to a greater extent than at present, it is too much to expect any marked improvement in the results of such trading concerns.

THE WAITAKI FARMERS’ FREEZING COMPANY. LTD. Period Paid-up General Working Net ended Capital. Reserves. Profit. Result. Div.

The past 12 months show an improved result in the annual working. The company, having apparently experienced a normal year, records a net surplus of £5066, which is a decided advance on the result of 1926-27. Aided by a recovery of £1046 from the losses on stocks previously incurred, a sum of £5OO can be written, off preliminary expenses, while the debit balance is reduced to £33,802. The stuck treated for the past year has risen to 294,676. but it would seem that the freezing works are able to cope with a considerably larger number. Un-

less stock comes forward in larger volume the matter of reducing the adverse • balance seem as if it would be slow and tedious. Little fault can be found -with the expenditure of £4301, which compares favourably with the working revenue of £9366. and is evidence that the outgoings, have been carefully watched. It may be' assumed that the interest charge makes a heavy demand upon the profits. A reduction in the interest group from £3981 to £2060, or to nearly one-half, looks promising, but the question arises regarding the entry for debenture interest. Wherever it is made, the profit and loss account bears no signs of it. . Assets are divided between fixed arid liquid in aggregates of £188,066 and £12,869 respectively. No distinction is drawn in the latter case between the different items that compose the group. Stocks and stores, sundry debtors, unexpired fire insurance premiums, etc., all go to make up the total, but, as the contribution of each item is not stated, there not much information to be gained. When a moderate allowance is made for the amount tied up in stocks and stores there is not a large balance to cover sundry debtors and other more easily realisable items. No mention is made of the bank account, the side of the balance sjieet on which it appears being left to conjecture. The position of preliminary expenses is of uncertain tenure, and, now that there is only a balance of £lOOO left, it is hoped that the next year or two may see its disappearance. Of the total fixed assets amounting to £188,066, approximately two-thirds represents land and buildings. Provision for depreciation on the buildings has not been made during the past two years. It may be assumed that buildings form the bulk of the valuation of £125,793, in which case the allowance of a reasonable rate of depreciation would cause a serious inroad upon the surplus. a wastage provision is similarly made in respect of the plant and machinery, contained in the total of £62,272, it is readily seen how far the past season’s profit might be affected. Mainly instrumental in producing the profit, their consequent deterioration should logically be taken into account.

The general liabilities amount to £8567. It may be assumed the bank has a place here among others since the assets are pledged partlj’ to it. A large reduction has again taken place in the total of the general indebtedness, which the issue of shares during the year would only partly effect. The New Zealand Refrigerating Company, Ltd., as the vendor company, still appears as creditor for £132.500. As its interest in the concern is greater than that of the shareholders, it may be surmised that the direction of affairs is largely in its hands. The security for its loan being debentures over the assets as in the case of the bank, there is no property left unfettered to the company. The fact that recovery has been made of some of the losses on stocks may lead to the hope that further reduction of the loss from that source may be obtained. The company since its inception has had to face the misfortune of an overstocked and falling market, while the inability of the buyer of the 1925 output to meet his obligations imposed a further severe strain upon it. In the circumstances the debit balance of £33.802 is not likely to be an (insurmountable obstacle, but much time and labour will be required before it is finally overcome.

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Total Trading Ratio Charges. Return. p.c. 1918-10 £33,787 £126,008 30.78 1919-20 48,35/ 110,426 43.79 1920-21 29.597 34.956 84.67 •1921-22 34.765 39.761 87.43 1922-29 34.860 29,496 118.18 1923-24 32.446 59,475 54.5<j 1924-25 40.905 137,211 — 1925-26 29,844 26.617 112.12 1926-27 25.917 34,240 75.69 1927-28 20.779 30.275 68.63 * Fifteen months. t Loss.

£ £ £ Sept. 5, IMG 60,682 — 8,454 *15.913 — Oct. 31, 1927 86,500 — 7,949 *23.652 — Oct. 31, 1928 93,121 — 9,366 t 5,066 — • Loss. t Profit.