Financial Reviews A WAITING GAME

NZ Truth, Issue 1213, 28 February 1929, Page 9

Financial Reviews A WAITING GAME

♦ • » Westport-Stockton Goal Company patience? needed

(By "Fiat Lux.") / ■ ;. Although the Westport-Stockton Coal Company Limited has improved its financial position, compared with the 1927 figures, the writer is disappointed that the 1928 (disclosed) profits are insufficient to warrant a dividend being paid to preference shareholders. ' - - : HE still is of opinion, however, that However, as the tonnage output was this company's prospects endow its 8755 tons greater m 1928, these exshares with speculative interest far penses were correspondingly higher by m excess of present-day market £2695, but the-^ marketing, of the values. higher quantity actually produced a That some speculators realise the lesser return, so the company lost potential value' of this company's or- nearly £4000 on these two items as dinary shares m particular Is clearly compared with 1927. shown by the rise which has taken _, place m the market price during the Then, of course, the royalty past year. charge went up, and . this cost a They have gone up from about 2/- further £198, the only items showto 3/6 (10/- shares fully paid up) m ? an improvement on the year against one shilling two years ago. being interest and exchange, £179, The company is undoubtedly get- *"<* travelling expenses, salaries ting on its feet, and this writer and gene^'. administrative exagain expresses the belief that a ■ S^V^ 'Zo^™ ™i duce ? j r ° m; dividend will be forthcoming for £6733 to £6233 — *» of £501. - the 1929 accounting period. The annual output figures are shown For the year 1928 the company's dis- m tons, and are: 1925, 89,877; 1926, closed net profit was £2079, against 114,804; 1927, 144,625; 1928, 153,380. £5582 m 1927, and both amounts have Now, regarding that 'very stout test been used to reduce the cost of the coal of the financial buoyancy of a concern Hume, which, unfortunately, proved to — the surplus of liquid assets over curbe impracticable m use. rent liabilities — the progress m this A comparison of the accounts for case bears a certain definite relation WESTPORT-STOCKTON COAL COMPANY, LIMITED. Condensed Comparative Balance-sheet, December 31, 1928. LIABILITIES. ASSETS. £££ . £ Capital paid up 197,785 — Property 246,294 f993 Debentures 70,651 — Furniture , 191 Creditors 15,215 J557 Tools and stores .... 5,128 fl 007 Bills payable 77 *77 Coal stocks 700 *425 Claims 7 17 Debtors, Ordinary . . 21,076 *2,120 „ House Purchase 4,362 |659 Cash 5,970 t359 £2_83,728_t£_480j £283,728 t£4Bo ' Note. — * Indicates increase and t decrease compared with last year's figures.

1928 with those for 1927 shows that, although the 1928 output was 8755 tons greater, the gross profit thereon was less by £1241. "Whether this was due to obtaining a lesser market price for the product or whether it was due ito higher maintenance costs m the mine is not explained m the very brief report issued with the annual accounts, but perhaps the point will be cleared up m the chairman's address at the annual meeting, which is to be held m Christchurch on February 28. Had a similar rate per ton of gross return been obtained for 1928 as was obtained m 1927, the gross earnings would have been £82,814 — £.5947' more than .is shown. ■ The point is a very important one and deserves to be cleared up to the shareholders' satisfaction. Another matter upon which the company received a setback compared with 1927 was m regard to freights and distributing expenses, but only when considered m relation to the gross profits on coal. Considered as a cost per ton on the output, this item of expense actually was reduced by approximately one per cent. ' ;■

to the company's output and also to its .profit and loss result. At the end of 1925 its surplus of liquid assets (and which includes tools and stores, since this item varies so greatly from year to year) over purely current liabilities amounted to £17,276. In 1926, however, serious reverses were met with; a loss of £5713 was incurred on the .year's work, with the inevitable result that the surplus fell to £12,342. In 1927, however, it recovered to £20,958, whilst at the end of the year under revlety it rose further to £21,951. . •■■■■•■ It is this writer's firm conviction that the policy of the present management is to put the mine and its affairs m first-class order and condition out of revenue earnings before disclosing sufficient profits to warrant shareholders pressing for a dividend. • This rock-bottom foundation process may take another one, or even two years, to carry through, but it is an eminently sound policy, and one which, though difficult m carrying out, will m the fulness of time amply reward shareholders for their patience.