LOWER PROFITS EARNED

Southland Times, Issue 23736, 7 February 1939, Page 3

LOWER PROFITS EARNED

SOUTHLAND FROZEN MEAT COY DIVIDEND OF £6 13/4 PER CENT. The annual balance-sheet and profit and loss account of the Southland Frozen Meat and Produce Export Co., Ltd., show that for the year ended December 31, 1938, the net profit was £21,934. This amount is, in round figures, £9OOO less than for the immediately preceding year. The profit is not quite sufficient to pay the dividend of £6 13/4 per cent, for die year, which requires £22,718, or some £7BO more than the declared profit. In addressing the shareholders 12 months ago the chairman, Mr J. Gilkison, explained that the profits of the company for 1937 were materially assisted by the high price received for a large quantity of carried-over slipe wool, as well as for pelts, tallow, casings and other products. It is a fair presumption that the fall in profit is attributable to less favourable markets in 1938 for the company’s products. The profits for the last eight years have been: £ 1931 14,358 1932 14,516 1933 51,085 1934 22,058 1935 18,117 1936 13,386 1937 30,985 1938 21,934 The gross profit was £40,188 as compared with £48,305 in 1937 —a reduction of £Bll7, which sum, together with an increase of £934 in general charges (rates, rents, salaries,_ etc.), accounts for the £9OOO fall in net profits. The dividend for the year is 1/4 a £1 share, or £6 13/4 per cent., as compared with 2/3J a share, or Hi per cent, for the preceding year. The paid-up capital of the company remains unaltered at £340,777. There is an increase in the item “sundry creditors, advances against . consignments and provision for contingencies” from £141,506 to £152,941. An amount of £22,291 owing to the Bank of New Zealand appears among the liabilities, an account opened, doubtless, to avoid breaking into the company’s cash on fixed deposit, amounting to £51,193. The fire insurance reserve (£25,000) and building fund reserve (£45,000) stand unaltered.

On the assets side the value of land, buildings, machinery and plant represented the works at Makarewa and Mataura, the offices in Invercargill and the farm at Glencoe (on the basis of cost, less reserve and depreciation) is shown at £321,030, an increase of £48,000 in the 12 months, showing that to meet an expanding business the company has been enterprising in extending its premises and increasing its plant. Stocks and stores are also higher, standing at £112,341 as against £91,823, an increase of more than £20,000. On the other hand sundry debtors and mortgages are less by about £6500, the item being shown at £25,586 as against £32,144. The balance at the London agents’ at the close of the year was £10,683: the year before it was £15,758. Investments stand at £122,865, as compared with £126,954, a reduction of £4OOO, and cash at £51,193 is less by £20,000 than a year before, and in addition £22,291 is owing to the bank. The reduction in cash; resources, investments, London agents’ balances and sundry debtors and mortgages is more than accounted for by the increases in property and plant and stocks and stores, and total assets are shown at £644,073 as compared with £611,130 at the close of 1937.

The following table shows some of the changes that have occurred in the balance-sheet figures of the company within the last two decades:

Shareholders may be disposed to say that the return shown upon their funds is small. Against the total assets of £644,000 there are external liabilities of, perhaps, £100,000; if that estimate is too low at any rate there is half a million of the shareholders’ money in the business and the profit of £21,934 represents less than 4J per cent. on. that sum. But, as the balance sheets of a number of other freezing companies show, it has not been a favourable year for the industry, and if for the time being earning power appears to be low the position is one of exceptional strength. Of total assets of £644,073 a shade over 50 per cent, are liquid, and upwards of £200,000 is in cash, investments and mortgages, so that the backing for shareholders’ scrip is solid.

1920 1930 1938 £ £ £ Capital 113,539 113,547 340,777 Overdraft — 22,291 Creditors etc. 97,634 56,434 152,941 Reserves 125,365 134,704 128,063 Property etc. 153,915 124,009 321,030 Stocks etc. 32,466 31,073 112,341 Debtors etc. 28,354 12,883 25,586 Investments 63,911 82,688 122,865 Cash etc. 57,888 54,030 62,248 Assets 336,538 304,686 644,073