SHARES & MINING

Observer, Volume XXXVII, Issue 15, 16 December 1916, Page 20

SHARES & MINING

[By Bullionist.]

THE balance-sheet of the Union Steam SHvitp Company i>s a thing apart —it is unique, it is a masterpiece for concealing all information, and no doubt there is a reason for it. Joint stock companies are peculiar in their methods, and some day someone will find it profitable to write on the phychology of joint stock concerns. A company that is. doing exceptionally well goes to extreme lengths to hide from the public gaze the huge profits that are being earned, and a company that is. doing exceptionally badly also gives as little information as possible so that the public may not discover its precarious position and prospects.

There are other joint stock companies that take in fire insurance premiums, licenses, and stationery as assets, notwithstanding that these items are, the ordinary expenses of the year. Such concerns are anxious to show a profit and to justify a dividend. Others again just disclose their position honestly whether it be good or bad, but the number of companies who do this is exceedingly small. The Union Steam Ship' Company's balance sheet, is. as already stated, unique. Its gives the minimum of information and the balance sheet is "private. Wiiy? The Union S.S. Co. is a public joint stock company and there is traffic in its shares on the various stock exchanges , why then, is the balance s!heet marked private ?

Again it is obvious that the directors do not wish the balance sheet, even with ite meagre information, to come under the vulgar gaze, so it is marked "private." If the public knew as much as they ought to know there may, probably would be a persistent and irresistible demand for a reduction of freights and fares, and that demand will yet have to be made or Parliament may be forced to take action to provide the Dominion' with >a coastal and intercolonial service less expensive than that provided by the Union S. S. Company.

According t?o the balance sheet under review the net profit for the year was £155,679 15s 2d ; the sum of £293 12s 6d was derived firom transfer fees and £27,133 8s 5d was brought forward from the previous year, making a total of £183,106 16s Id, and this has been allocated as follows.: Debenture interest £5,----799 5s 8d; dividend of 5\ per cent. on preference shares £55,000; dividend on ordinary shares at 8 per cent. £80,000; to be carried forward £42,307 10s sd.

But this is not. all the dividend that the ordinary shareholders get, for we have a new practice developing with companies of paying a bonus from one fund or another. The insurance fund serves this, purpose with some companies and others call upon the profits earned by investments. The Union S.S. Company is giving the ordinary shareholders a bonus of 2 per cent, totalling £20,000 by taking that amount out of the insurance fund which is shown in the balance sheet as £534,548 16s 3d. Paying the bonus out of this insurance fund is just humbug and deceive nobody,

not even the members of the Seamen's Union. The amount could just as readily have been paid out of the profits of the year, and that would have, meant carrying forward £22,307 instead of £42,307.

To have done so may have caused some awkward questions to be asked by inquisitive people. Now it can be said that the Company has only paid 8 per cent, out of profits. But it is very thin. Before the next balance sheet comes round there is nothing to prevent the directors replacing the £20,000 in the Insurance Fund, for a hundred and one reasons could easily be discovered for doing so. The ordinary shareholders get 10 per cent, and as things go this is a comparatively small dividend; but it must be remembered that the Union S.S. Co. reconstructed its capital. The. ordinary shares used to be £10 they are now £1, that was the result of the reconstruction and the capital was well watered, so that those who participated in the reconstruction and have held on to their shares are now getting equal to 20 per cent. The ordinary £1 shares of the company are selling readily at 45s each. All ■of which goes to show that it is time the general public received some consideration from this wealthy corporation.

The meat companies are doing well, or ought to be if they are any way decently managed. The Canterbury Frozen Meat Company has been able to declare a dividend of 6 pei- cent, on preference shares and 8 per cent, on ordinary shares, in addition to which the latter receive a bonus of 3 per cent. The Gear Meat Company's balance sheet foi- the year ended November 30, shows a "credit balance of £72,452 17s sd, and the distribution is as follows: Dividend of 10 per cent.; dividend of 5 per cent, from profits earned by reserve funds; dividend of 5 pei- cent, from insurance reserve and a special dividend of 5 per cent, in consequence of the Company's abnormal receipts.

The Gear Company's shareholders are extremely fortunate this year for they actually receive in. dividends 25 per cent, or 5s in the £. It would be very unwise to assume that this will" become the settled dividend of the company. The times are. abnormal, and meat is one of the commodities required by the military, hence the abnormal profits. The shareholders can, however, always rely upon receiving a good dividend, because the concern is exceedingly well managed.

The finances of New Zealand are in a very healthy condition, as. they ought to be, with the huge profits the country is making. The revenue from all sources for the eight months ended November 30th, 1916, totalled £8,399,452, as compared with £7,074,973 in the corresponding eight months of the preceding year, showing a gain of £1,300,000, an average of £162,500 per month The expenditure for the. eight months was £8,392,251, against £7,935,811, an increase of only £456,000, which is very moderate, considering the expansion in the expenditure under Special Acts and the increase in the interest and sinking fund.

For the eight months the revenue and expenditure are very nearly the same, and a surplus does not seem possible. This, however, is a wrong assumption. The income tax, with its super-tax, which hits hard, will be collected during the coming quarter, while the quarter's expenditure will not be much greater than the average. It is thus very probable that we will see as large a surplus as in the last financial year when it amounted to over £2,000,----000. The country will need every penny, for when the war ends the swing of the pendulum may strike us with some force.

Mr Harold Beauchamp, the chairman of the. Bank of New Zealand, invariably discourses interestingly at the half-yearly meetings of the shareholders, and his address last week was particularly good. His reference to the wonderful financial resources of Britain were timely, and,' while we have much to admire in this, we have much to condemn in those who are endeavouring to exploit the Imperial authorities. The way Great Britain is meeting the. heavy financial strain is a marvel to belligerents and neutrals alike. Much of the soundness of British war finance we owe to Mr Lloyd George, who was Chancellor of the Exchequer at the outbreak of hostilities. ■ • • Mr Lloyd George took the advice of financial experts, and did not merely keep it steadily in view, but acted upon it promptly. He set th? ball rolling, and Mr Reginald Me Kenna, who succeeded, him at the Treasury, found matters easy. Prominent financiers and bankers have helped the Government in every way, with the best results. Mr Lloyd George appears to be the only British statesman w'fto seems -likely to enhance his reputation through the war. If, as Prime Minister, he maintains his push, the Allies will be able to show some good results.

The song recital on Tuesday next by pupils of Mr Walter Impett promts to be a very enjoyable musical function. Not only will a large number of students be heard in a well-selected programme, but the occasion will also mark the farewell appearance of Miss Laura Walker prior to her departure to study further under Madame Melba's direction in Melbourne. The glorious voice of this young lady w-as heard to particular advantage in the "Messiah" music at the Choral Society's Concert on Tuesday night last. What is claimed t® be one of the best picture theatres irt Australasia, and certainly the largest in the Dominion is' The Strand Picture House, to be officially opened by His Worship the Mayor, Mr J. H. Gunson, on Friday evening at 8 o'clock. It is situated close to the Strand Arcade, Quee.n Street, and will have two entrances, one from Queen Street and one from the Arcade. Both are handsomely finished in white plaster with Mosaic flooring and American ash panelling. Marble stairs grace, the entrance leading to the circles, and there is a magnificent foyer or entrance hall. The seats are upholstered in leather, and curved in towards the screen. The whole building is a model of hygiene, and there is no place of j-ast for germs born of dust and dirt, and the ease with which the theatre can be cleaned is an outstanding feature. The lighting is on the semi-direct principle, and no open light is exposed to the eye. The electric bulbs are suspended within fluted glass bowls, which throw the light up against the white plastered ceiling, giving a soft light that is comforting to the eyes. Particular attention has been paid to the ventilation. The ventilators take the form of latticed openings in the Carrara work on the ceiling and round the sides, all well calculated to provide a liberal supply of fresh air. The very necessary musical accompaniments are provided, by a solo orchestra, a most wonderful instrument, and the. first of its kind to be used in this country, although they are played in every theatre of note in the States. The pictorial fare will be of the best, being, controlled by the New Zealand Picture Supplies, Ltd.