BEST SINCE 1921.

Auckland Star, Volume LX, Issue 226, 24 September 1929, Page 4

BEST SINCE 1921.

FARMERS' AUCTIONEERING. NET PROFITS, £51,069. 8 PER CENT DIVIDEND. The best year since 1921. This is the position disclosed in the annual report and balancesheet just issued by the Farmers' Co-operative Auctioneering Company for the period ending July 31. The profit and loss account, after making provision for bad and doubtful debts and depreciation, shows a net profit of £51,069. From this dividends on pref. shares have been paid (£15,193), leaving £35,877, from which it is recommended to pay a dividend of 8 per cent on ordinary shares, also income tax, and carry the balance forward. The balance brought forward from last year (£3388) has been added to reserves. Directors' Report. In their report the directors state that all departments, particularly the stock and merchandise departments, have shown a most satisfactory increase 'in turnover and earning power throughout the year. During the year the company's new wool store in Auckland was completed and brought into use in February. Buyers generally had expressed their satisfaction with the lighting and facilities for showing wool in the building, and it would undoubtedly be a great asset to the company in the future. The annual meeting is to be held on Saturday, October 12. Past Years Compared. The following table indicates the trend of operations in recent years:— Profits. Div. General Gross. Net. p.c. Reserves. £, £ Pre Ord £ 1925 . 200,107 55,508 6*B' 26,376 1926 . 131.373 37,939 6 6 26,376 1927 . 107,882 18",294 6 - 26,376 1928 . 130,536 41,065 6 6 26,376 1929 . 148,991 51,069 6 8 29,764 The accounts submitted on October 28, 1925, were for a period of 18 months ending July 31. These results should be exceedingly gratifying not only to shareholders but to the community as a whole, for it is difficult to over estimate the importance of the work carried out by these farmer financing companies. It will be seen that both gross and net profits are greater than those disclosed since 1925, when the figures represented 18 months' operations. Allowing for the longer period then reviewed, the present results are better. Only in 1921—a boom year—have the latest figures been equalled. A notable feature is that while gross profits are about 40 per cent up compared with 1927, net profits are about 2% times as high as for that period. This testifies emphatically to the drastic fashion in which expenses have been cut down in recent years. In this connection the following percentages are of interest:— EXPENSES TO PROFITS. 1927. 1928. 1929. Per cent expenses to , gross profits 83.04 68.54 65.70 Per cent net profits to gross profits .. 16.96 31.46 34.30 It is .not surprising that with these excellent results to work on the directors have decided to recommend a reversion to the old dividend rate of 8 per cent. Balance-Sheet Items. The following tables contain the chief balance-sheet items for the years ending July 31, 1925, 1928 and 1929:— LIABILITIES. 1925. 1928. 1929. Paid capital . 478,839 478,895 479,004 Mortgages 24.582 7,212 451 Fixed deposits. 37,179 25,586 24,576 Sundry creCTrs. 60,744 39,864 52,724 Customers' cr'a 12,635 6,971 1,025 Bank of N.Z. .. 31,946 19,371 52,826 Total outside liabilities ... 169,584 99,246 141,284 The capital account shows £750,000 authorised. £658,267 has been subscribed, of which £405,055 are ordinary shares of £5 each. Uncalled under this head totals £178,314. Preference shares at £1 each, all called up, total £253,212. . ASSETS. 1925. 1928. 1929. £ £ £ Properties 162,504 164,462 170,018 Machinery & pi. 13,288 10,305 10,137 Office equipment 6,552 7,105 5,450 Sundry dr., etc. 363.T45 328,679 371,243 Stocks 116,837 .81,245 93,937 Investments ... 48,151 43,973 42,739 Total assets .. 711',077 639,829 693,524 Liabilities apart from capital and reserves have increased some £42,000, whilst assets have gone up nearly £54,000. The following table shows the relationship of these two items over a term of years:— PERCENTAGE OF OUTSIDE LIABILITIES TO ASSETS. Per cent. Per cent. 1920 .... 36.45 1925 23.84 1921 31.83 1926 .... 22.38 1922 27.58 1927 16.98 1923 28.98 1928 15.51 1924 26.50 1929 20.37 The raising of the percentage during the past year is the natural result of increased turnover, which is chiefly reflected in the increase of the bank overdraft and the amounts owing by sundry debtors. The directors could, of course, call up sufficine capital to pay off the bank, but the 8 per cent dividend rate which they nave/ now reverted to would mean a bigger charge on the expense sheet. That assets have been conservatively valued seems to be indicated by the fact that although a big wool store has been put up in Auckland and other minor additions made, property account is only increased by £5600. An outstanding feature of the balance-sheet is the large amount owing by sundry' debtors, which is only another way of saying that the fortunes of the company are inextricably woven with those of the farming community.

Investment Aspect.

Attention was drawn in these columns last year to the financial soundness and the improved position of the Farmers' Auctioneering Co. At that time the shares were a drug on the market -and the £5 scrip could have been bought for £2 16/. The "Star's" hint was taken and at the present time there are buyers at £4 5/, with owners holding out for par. The latest assessment is much nearer to the intrinsic value of the scrip,, for the company's record is one that is exceedingly creditable to the management. There have, of course, been the usual problems which beset all farmers' companies during the slump period, and for three years ordinary shareholders had to forego their dividends. Yet during all its up and downs the company not only kept its capital intact, but paid its preference shareholders dividends on due date and never borrowed under bonds or in any other form involving high interest rates. The directors had refrained in the boom times from taking money at call, and consequently never had to seek shelter behind the moratorium. Altogether an excellent record.