Smaller Reserve Funds

Evening Star, Issue 23375, 19 September 1939, Page 6

Smaller Reserve Funds

Difficulty Experienced by N.Z. Companies

The difficulty so frequently men- ( tinned by company chairmen in New Zealand—that industrial concerns are finding it hard at present to build up reserve funds for expansion of business —-is illustrated in the accounts of five New Zealand companies which presented their annual accounts last week. Net profits in the aggregate are slightly lower than a year ago, and with dividends maintained at steady 7 levels, there is a smaller balance available to put back into production. Aggregate paid capital of the companies is £933,500. Their aggregate net earnings have dropped from £100,206 in 1937-38 to £95,929 in 1938-39, or from 10.7 per cent, of paid capital to 10.2 per cent. Dividends are held steady, absorbing 4.8 per cent.

in each year, so that the balance available for taxation provision, replacement of machinery and plant, rebuilding and expansion of business is reduced from 5.9 per cent, to 6.4 per cent. Taxation in practically every instance is higher this year than last, so that the actual amount available for ro-absorption into industry is reduced almost to vanishing point. The following table show the paid capital, net profits and their percentage to capital, and dividend percentage to capita], of the five companies for the last two years. In the ease of N.Z. Farmers’ Co-op., dividend percentages have been calculated on total paid capital—not on the preference capital on which alone dividends were paid.

Paid Not Profits Per Cent. Dividends 1938. 1939. Profit to Capita' 1. Per Cent. £ £ £ 1938. 1939. 1938. 1939. Timaru Lime ... 13,000 1,269 709 9.8 5.4 5 5 Milburn Lime ... 200,000 24,342 20.419 12.2 10.2 8.75 8.75 C.F.C.A 149,545 19,361 18,272 12.9 12.2 5 5 Invincible Building 30,000 1,654 1.766 5.5 5.9 5 5 N.Z.F. Co-op ... 540.964 53.640 54.760 9.9 10.1 *3.36 3.36 933,509 100,266 95.929 10.7 10.2 4.8 4.8 ’Dividends of 41 p.c. were paid on £150,(XX) and of 4 p.c. on £285,968.