Finance, Stocks, and Mining

Free Lance, Volume I, Issue 17, 27 October 1900, Page 5

Finance, Stocks, and Mining

THE Wellington Woollen Company's balance-sheet for the year ended 30th September, 1900, is very satisfactory, because it shows that a larger profit was earned during the period than in the previouj year. The nett profit shown in .the balance-sheet is £11,770 193 lid, while for the previous year the amount was £10,126 5s sd, so that the profits increased by £1644 14s 6d or more than 16 per cent. • • * But the directors are not the class of men to take too optimistic a view of things. Some directors on the strength of the increased profits would have returned more to the shareholders by way of dividend, but the Wellington Woollen Company directors have adopted a different course, which will strike the average business man as commendable. The reserve fund is increased by £2000, the same amount has been written off the book value of plant, and best ot all, £2000 has been written off the cost price of raw material. • * * Then £6000 of the year's prone is applied to strengthening the position of the company. The reserve fund now stands at £14,000, and with other sums held back, the total in reserve is £15,477. It should be pointed out, however, that the reserves are all invested in the business, and as the strength of the chain depends upon its weakest link, so the value of the reserve depends upon the business itself. * * * The writing down of the cost price of raw material, which of course is wool, was the very wisest thing the directors could do. Compared with a year ago, wool is lower in value by fully 40 per cent, and as the company no doubt bought its wool at the higher rates ruling in the year, to retain that value would have been unwise, more especially as the tendency is for a further decrease in the value of wool. * * * The liabilities of the company show a substantial increase. Bank overdraft has increased by £7,908, sundry creditors by £2 021, and bills payable by £333, the aggregate being £18,193 'fl**,* 1 >**>' showing an increase of £10,Zbd. rJut against this must be placed the value of the increased quantity of raw material on hand, which amounts to £10516, and the larger amount (£3263) owing to the company by sundry debtors. ♦ * * The balance-sheet is very satisfactory viewed from all points, and it is currently reported that there is no slackening of work at the mills, and that orders continue to come in freely. The tendency of trade generally is towards slackness, and, later on, the Wellington Woollen Company will, with the rest, be affected. In the meantime the company is doing well and receiving its full share of public support. „ w * The Bank of New Zealand is doing well, so says the Premier of the colony, and the proof of it is to be found in the fact that the bank has exercised the right to buy back the preference shares issued to the New Zealand Government under the Bank Act of 1895, and the purchase money has been paid in bard cash. * * * The transaction is a good one all round, and is worth explaining. There is no information available other than that afforded by the Premier, consequently we must make deductions. The preference shares carried a fixed dividend of 3£ per cent, and, when taken up by the Government, were paid for by the issue of 3^ per cent debentures. • * * The position with regard to the pieference shares has been this, that while the bank paid 3J per cent on them it also received from the Government, as interest on the debentures, 3^ per cent, so that neither side benefited. The debentures were, however, a source of strength to the bank to this extent, that they were always available in case of any emergency. The interest is payable m London, consequently they could have been sold in the British market at any time. ♦ * * The bank has never had occasion to realise on these debentures, and it is quite possible, therefore, that it still holds them in London. The bank could, no doubt, hn\e boughi back the preference shares with the debentures that were issued in

payment for them by the Government, and so closed the transaction, but the bank hag not done that, for it has bought the preference shares back with hard cash. « • * The hard cash is derived from the deposits (fixed and free) of the clients of the bank, for which there is evidently no other profitable outlet, and buying back the preference shares means investing £500,000 at 3+ per cent. The bank will not now be obliged to pay interest on the preference shares, and that means saving £17,500, which is good business. # * * The debentures issued by the Government for the preference shares still remain out, and cannot be redeemed until mature, which is not until 1904. In the meantime the Public Trustee, who holds the money paid by the bank, cannot let it lie idle, but must reinvest it so that it may earn sufilcient to pay the interest on the debentures. Now, the Colonial Treasurer wants money — a lot of money— and cannot very well float a loan in' London on favourable terms. He can now borrow £500,000 from the Public Trustee on short-dated debentures, and so keep the Treasury flush of cash. Thus, it is good business for the bank and good business for the Colonial Treasurer. * * * There is no doubt that the Bank of New Zealand is just now enjoying a run of prosperity, but so are all the other banks operating in the colony. At the same time, it is but fair to say that Mr Mclntosh, the Colonial Auditor, who is after all the principal bank officer, is doing good work, and it will not be his fault if the bank's position is not greatly improved before Parliament has to deal with the institution. * * * Frozen meat is keeping up in price in the British market. Mutton has had another advance, but beef is slightly easier. The output of frozen mutton will not be so great this season as it was last, and the scarcity of fat stock is being felt by the companies. Southern buyers are now raiding the Wellington West Coast district for supplies, and the competition is a bit keen and more than lively. The Wellington companies have their buyers dodging around, and farmers are getting the full limit of prices. * * * The shares of the National Mortgage and Agency Company are coming along strong. There has been a steady demand for them for some time past, and during the past week there were sales at S6s 6d. Buyers are freely offering 365, but sellers are scarce. , f '' : Butter is showing up now, and the price is all right— not quite so good as last year, but still very good. There will be an enormous colonial output this season, and the pressure of supplies will knock prices down. There ought to be fair business doing, however, right up to Christmas. The exports of butter from New Zealand last month totalled 2852cwt, valued at £12,452, against 3664cwt, yalued at £14,490, in September of last year. The Grey Eiver return last week was disappointing, and was made doubly so by the ridiculous forecast made the Saturday previous. When the return of 220z was published it was stated that the following week's return would be 30oz, instead of which it was only llioz. * * It is these unreliable tips thab make one sick of West Coast ventuies. Oi course the directors of the Grey River Company are not responsible for the guesses that are published. All the same, the foolish tips are having a bad effect. * • * Labour on the West Coast is plentiful, and the right class of labourers scarce. Pontoon builders are earning from 15s to 17s 6d per day, and the wages don't seem good enough for some of the carpenters. Navvies for road-making are also wanted, and carters with good working teams can make plenty of money. Men are making good wages cutting silver pine sleepers and timber for pontoons, and altogether the worker has the fat end of the stick on the West Coast just now. There is an opening for those who are out of work in Wellington. — # * Attention has been dhected again and again to the Charlton group of dredging companies. The Charlton Creek shares ha\e advanced from 32s 6d to 42^ and the dredge is one of the most consistent in its returns. The Central Charlton shares have gone up from 16s to 23s 6d, and the La<ly Charlton from 5s discount to Is 6d premium. The Charlton Valley, which comes between the Central Charlton and the Lady Charlton, is still neglected and therefore worth watching. The Lady

Charlton dredge will be at work by the end of next month. * # • None of the West Coast dredges have got on to good wash. The Waipuna had a very disappointing return, and the Mokoia also had a small return, but better than in the previous week. Speculators will need to wait a little while. * « * In Christchurch there has been considerable buying of Grey Eiver Extended shares, and in Wellington Jones's Flat shares have been selling freely. Both claims are near the Grey Eiver Company's property and are looked upon with favour by many people. * * * The Sailor's Bend dredge is finished and ready for active work. This claim is expected to give very good results and the shares of the company are at a very high premium. * # * The Dunedin people are beginning to believe that the dredging slump has ended. At any rate it is significant that most companies whose claims are at all favourably situated see their shares changing hands at prices that show a considerable improvement upon those ruling two or three months ago. * m w There has been practically no flotation of new companies for several months ; all rickety concerns have been wound up without mercy ; dividends have been fairly large ; weak holders have been squeezed out and there has been a fair inflow of outside capital. All these things have contributed to the improvement of the market, and as the returns keep good and new dredges are being put to work much more quickly than has been the case for some time, the worst of the slump is over. » # • West Coasters are bent upon fleecing all and sundry. Doctors, lawyers, navvies, carpenters, and even nightsoil contractors are raising their charges to outsiders who appear to have money. In point of fact the West Coasters are adopting the besir means of choking off investors in West Coast ventures. • # * Some wag once said that there were more mining experts and more liars to the square inch on the West Coast than in any other part of the globe. He was partly right and partly wrong. You can tell the mining expert by his glowing report in a prospectus, but the liar, well he is not easy "to detect. He gives you a tip and bets a hat upon it, which makes you believe nim. You buy shares and get let in. He parts the hat smilingly, but he's got your stuff.