THE NEW ZEALAND SHIPPING COMPANY LIMITED.

New Zealand Times, Volume XXXII, Issue 4934, 15 January 1877, Page 3

THE NEW ZEALAND SHIPPING COMPANY LIMITED.

TO THE EDITOR Of THE HEW ZEALAND TIMES. Sir, —In your issue of the 11th instant you reprint, without expressing an opinion on the subject; a letter from a correspondent of the Financier, rather severely criticising the balance-sheet of the New Zealand Shipping Company. Your clipping does not give all the correspondence which appeared in the paper referred to, and you will probably like to have'and reprint it in its order, and I ' enclose it, begging you will be good enough to give it the same prominence as you have given " An Old Colonist's " letter.—l am, &c, ■ H. Sjbxwyn Smith, General Manager of the New Zealand Shipping Company. ' Christchurch, Jan. 13. [Our correspondent will have observed ere this that in the following issue to that in which " Old Colonist's " letter appeared we did give a letter in reply equal prominence. However, we publish the balance of the correspondence.] To the Editor of the Financier. Sib, —I have read with interest the letter of your correspondent "An Old Colonist," regarding the published balance-sheet of the New Zealand Shipping Company, Limited. I am surprised that this document has hitherto escaped the criticism to which it exposes itself. The remarks of your correspondent are pertinent, so far as they go, but they only deal partially with one or two matters requiring explanation. Let me state a few others. The balance-sheet appears to be rather a jumble of capital and revenue, items which are usually kept separate being put together without any apparent order. Running down the items on the credit side, there is only one of these of such a nature a» appears to me capable of yielding a profit, viz.: —"Current voyages on ships, £25,864 15s. Bd." yet the gains are stated as £43,177 10s. lOd. It is difficult to understand what is meant by the item.at credit "durrent voyages of ships ;" if it means anticipated profits on unfinished voyages, anyone connected with shipping knows how many contingencies may arise to convert an expected profit into a loss, even when the anticipation seems to be well founded. ' The dividend is referred to in the following terms :—" Dividend—amount proposed at the rate of 8 per cent, per annum for the half-year ending 30th June, £5000." Now, a casual reader would assume that 8 per cent, dividend had been declared, but the statement covers a period of eighteen months, and, the paid-up capital being £125,000, the £SOOO yields a dividend at the rate of 2§ per cent, on the period over which the accounts extend. There are a number of other items regarding which questions might be asked beyond those, noticed by your correspondent, such as the adding of accrued interest to debts due, instead of making this a first charge on profits ; the absence of any reference to salaries, office charges, &c, and the large sum of £28,705 19s. Id. at credit in bank, while such large sums are due.—l am, &c, A New Zealander November 10,1876. To the Editor of the Financier.l Sir, —You favored me on the 7th inst. by inserting in your paper a reply from me to a letter from " An Old Colonist," which appeared in your issue of the Ist instant, on the subject of the New. Zealand-Shipping Company. A letter has since appeared, signed " A New ZeaJafcder," adopting the reflections' of " An Old Colonist,'' and expressing surprise that the balance-sheet of the company has hitherto escaped the criticism oa other points to which it exposes itself. ff In' so far as' the reflections of "An Old Colonist" are concerned, it is unncessary again to reply to them, as the proof I have called for of the statements which were made by him has not yet been afforded, but I have to crave the opportunity of a few words in reply, to " A New Zealander*s " further criticism. ■....; "A New Zealander" remarks that the balance-sheet appears to be rather a jumble of capital and revenue-7-I affirm,.on the that the .balance-sheet is in the usual form of many, and, with the exception that it does not exhibit the separate details,of realised re-J venue and expenditure, of most balance-sheets.; The capital called-up is distinctly stated as £125,000, less £987 10s. unpaid, and the only item of revenue shown, is that which is un-! realised or estimated—viz., " current voyages of ships, £25,854 15s. Bd.". Why the directors decline to make public the details of realised revenue and expenditure, arid loss incurred, the; net. balance of which accounts, after crediting the current voyages of ships, is £43,177 10s. lOd. to the good, 'and yet show separately; the "Current voyages of ships," may be readily' conceived. .:;"■■■ Opponents are not in the habit of showing their hands to each , other, and as the publication of such details would afford information .to", opponents which they would very much like to obtain, such as the outturns of charters, where profit has been made, and where loss,; and, what the expenses have been, the directors \ very wisely consider the interests of the com- ; .pany. in preference to the curiosity of opponents, and therefore decline.to enlighten them, whereas shareholders who desire this particular knowledge may readily obtain it from the company's officials. - But estimated profit is of a different character to actual profit, and the shareholders would have a right to complain if this item were not prominently stated, and therefore '.' current voyages of ships " is made a promiBent item in the balance-sheet. " A New Zealander" remarks that if this item means anticipated profits on unfinished voyages,.,contingencies may arise to convert anticipated profits into loss, and therefore implies that such an item should hot be in included in ; the balance-sheetl This is equivalent to saying that because the interest which an in-vestor-derives from his investment has not actually been received, although due when he makes up his balance-sheet, he has no right to take credit for it, for fear of contingencies. My view is, that the directors are bound to make a proper estimate of profit on current voyages, allowing for contingencies, and if they suppressed this item, they would not be true to Weir trust, and woul4 incur a grave responsibility. With reference to the complaint in rsgard to the dividend,_that, inasmuch as the- statement covers a period ot, eighteen months, and the paid-np capital being £125,000, the £SOOO yields a dividend at the rate of 2g per cent, on the ; period over which the accounts extend, and not 8 per cent., I should recommend "A New Zealander" to try again, with the further if he does not already possess it, that, the paid-up capital of the company, at the commencement of the period in question, was only £68,388, the remainder being called up during the currency of the period. But, independently of this fact, surely the directors have aright, within their powere, to declare a dividend for any period they may think fit ; and seeing that, owing to the calls, it would be very confusing to distribute the £SOOO over the whole period, they wisely applied it to an 8 per cent, dividend for the half-year ending June 30. For information on other points, I must

refer " A New Zealander " to the report of the proceedings at the company's annual meeting, which accompanied in y letter of the 4th instant, but J cannot refrain from remarking that his concluding sentence, where he accuseß the company of adding accrued interests to debts due, instead of " making it a first charge on profit," is either illustrative of an unfair spirit or gross ignorance. Seeing that he acts the censor, I cannot accuse him of the latter, and I therefore ask—ls not accrued interest unpaid by the company a liability, and ought not estimated liabilities to be shown, as well as estimated assets ? and if the estimated liability has been' calculated and shown, which " A New Zealander " acknowledges, by the fact of the interest being added to principal, where could it be put but on the other .side of the balance-sheet as a charge oh profits ? and there, no doubt, the auditors of the company will vouch, if need be, that it has been so placed. In fact, what " A New Zealander" says the company ought not to do, that, by every right principle, they ought to do, and have done; and what he says the company have not dona, but ought to do, that, I affirm, it will be found they have done. This climax of censoriousness in those who profess to be impartial critics is a remarkable phenomenon, and ought certainly to disclose the character of the opposition which this young but prosperous company is accustomed to both here and in the colony.—l am, &c, ■ • > L. London, Nov. 13, 1876.