COMPANY PROGRESS

Otago Witness, Issue 4029, 2 June 1931, Page 61

COMPANY PROGRESS

WILSONS (N.Z.) PORTLAND CEMENT, LIMITED. Paid-up capital, £600,000.

Although the past financial year has brought a net profit diminished roughly by one-sixth from that of the preceding year, there has been no reduction in the m dJstribut’on. As the rate for 1929-30 -was the largest declared up to that time, a recurrence to the former rate of 10 per cent, on this occasion might have caused little comment, and, in view of the smaller profit, would have appeared justifiable. The recommendation, however, is to hand to shareholders an amount some £BOO in excess of the net profit, with the result that general reserves for the first time will show a slight shrinkage at the close of the 12 months. lhe allocation of the net profit between shareho.uers and the business has been as follows:—

The assumption is that either the present set-back is considered to be of a temporary nature, or that the hidden reseives are strong enough to warrant such a generous division. Perhaps both considerations may be contributing causes. As is customary, this company publishes its balance sheet in an abbreviated form. f"® a ®S ets a Bg re gate £918,428, of which £4OB 620, or practically one-half, is entered under investments. If by “investments the controlling interest in subsidiary companies is denominated, it is possible that fixed property represents a considerable portion of what appears as cash assets. Government bonds are free of such a contingency, but it is not stated what proportion they represent of the whole. If a moderate rate of interest be taken as the average return from .the investment group, it will be seen that one-third of the past year's net surplus could be supplied from that source. Stocks, at £53,663, have slightly fallen, possibly on account of a more conservative valuation rather than to n y diminution in quantity, while sundry debtors have risen slightly to £74,139. lhe favourable relation of stocks to the net profit is again noticeable. The dimensions of the cash group are an indication of the strength of the position. At £69,345 that group has receded from its aggregate 12 months previously, but is more than able to cover the proposed distribution of 7J per cent. An unstated Part is earning interest as deposits. The steady shrinkage of the fixed assets in recent years continues. In four years the property has been reduced by £160,000. It does not appear whether that result is due entirely to depreciation allowances, but the inference is that it is these that have been the chief diminishing agency. The varied nature of a group that comprises freehold land, limestone deposits, and hydro-electric plant—to mention three only— must necessitate some complications in arriving at a wastage provision for the period. Whatever methods are adopted, the provision appears to be on a liberal scale. One result of that policy is seen in the followin'* comparisons:—

When the property which produces, manufactures, and distributes the main commodity is valued at less than one-third and almost as low as one-fourth, of the total assets, the return necessarily is high. The slight variation in the liabilities to outsiders (£61,729) does not indicate any material difference in their compostion, but, with reduced profits, there is possibly a smaller provision for income tax. In the absence of a profit and loss account, the three charges specifically mentioned are depreciation, bad debts, and taxes. With no reference made regarding the amount of capital expenditure, the extent of the first cannot be gauged, while the provision for the other two is also problematical. Shareholders must rest satisfied with the assurance that provision has been made without leaving the opportunity to consider the adequacy or otherwise. As long as a per cent, return is declared on their holdings, they are scarcely likely to exercise their minds on such matters.

NEW ZEALAND PAPER MILLS, LTD. Paid-up Capital: 1919-21, £94,775; 1922, £122,006; 1923-31, £150,000.

The annual net profit is maintaining a fairly even level with an upward tendency. In view of present trading conditions, the continuance of the rise in the past financial year must be gratifying to those concerned. The dividend of 7J per cent, declared for the year is above the average over the past 10 years, and leaves a balance of £llO6 to add to reserves. The return comes out at 8.24 per cent., the business receiving the benefit of the slight excess. roFo«o eX P end ‘ ture ’ which is grouped at has increased some £ll5O. In its relation to the balance on manufacturing and trading account, it remains about the same, but as regards the gross profit it has slightly increased owing to a reduced revenue from interest and rents. For the last four years, however, the ratio has kept remarkably constant, as is seen below :—

In recent years the above figures indicate an increasing turnover. Some reduction has been effected in the indebtedness during the past year, liabilities to outsiders totalling £4O 718 as against £51,187 at March, 1930. The decrease of nearly £15,000 in the bankoverdraft, bringing it down to £25,634, must have meant a considerable saving in the interest bill, if the reduction took place gradually throughout the period. Some of the difference has taken place at the expense of the sundry creditors, which item has increased to £15,083, inclusive of the income tax provision. Whether that provision is only for the estimated amount due for the past season, or represents also surpluses on previous provisions, does not appear. < General reserves have advanced to £34,484 by the increased floating balance. There has been no pronounced addition to reserves lately, but they are creeping up slowly, even if they are some distance below their high water mark of eight years ago. They are mainly held in the general account, which continues at £20,000, while the staff fund reserve, at £6204, shows little alteration. Reserves are retained in the business and help to make up partly for the shortage of capital. Their growth, however, will require to be accelerated if they are expected to take upon themselves the full burden of the shortage. A further reduction is shown in the property and plant, which appear at £168,351. It is not disclosed if this is solely the result of depreciation, but it seems reasonable to infer that it is mainly so. The gradual writing down of the book value of the fixed assets is a favourable sign, but information regarding the apportionment of the value among the different sections is absent. A small but increasing property is the afforestation area and development (£1841), which should yield material assistance in the future. Among the liquid assets, the bulk is held in stocks. They are reduced to £43,367, bettering their relation to the gross profit, the amount of which, however, they still hold with something to spare. As raw material, the manufactured article, and the intermediate stages are represented, cost of production will have an important bearing upon the valuation, in which raw material may not necessarily occupy a large place. After an allowance for bad debts and discounts, sundry debtors are entered at £16,668, having moved down in sympathy with the other larger assets. While the assets have decreased, the liabilities have done so to a greater, extent. The improved position is that liquid assets aggregating £61,008 are faced with liabilities to outsiders of £40,718. The margin is, still too narrow to admit of unfettered trading when over two-thirds of the liquid assets total is tied up mors or less permanently in stocks.

General Marine Net Dividend Mar. 31 Reserves. Insurance. Profit. & Bonus. 1920 £ 10.606 £ £ 12,972 P.c. 1921 13,367 590 39,171 5 1922 17,357 5.667 41.989 6% 1923 25,616 6.719 53,2(0 7% 1924 34.824 8.127 56,708 7 11-12 1925 52.801 10.534 67,977 8 1-3 1926 79.212 17.145 86,411 10 1927 107,421 27,756 88,208 10 1928 135.660 30,367 88.586 10 1929 161.252 32,830 85.586 10 1930 176.208 34.567 89.955 12% 1931 175.390 36,309 74.182 12%

Return on Capital, Distributed. Retained. 1919-20 P.c. 2.10 P.O. p.c. 2.16 1920-21 6.19 5.00 1.19 1921-22 7.00 6.25 .75 1922-23 8.88 7.50 1.38 1923-24 9.45 7.92 1.53 1924-25 11.33 8.33 3.00 1925-20 14.40 10.00 4.40 1926-27 14.70 10.00 4.70 1927-28 14.71 10.00 4.71 1928-29 • • 14.26 10.00 4.26 1929-30 14.99 12.50 2.49 1930-31 12.30 12.50 .14* • Minus.

Filed Total Ratio to Total Mar. 31 Assets. Assets. Fixed. Liquid £ £ P.O. p.c. 1319 . 534.276 638.133 85.13 14.87 1920 ... . 530.851 645.266 82.27 17.73 1921 ., . 522,515 709,326 73.66 2G.34 1922 ., . 501.295 733.501 68.34 31.66 1923 .. . 445.203 733.427 60.70 39.30 1924 .. . 414,460 736.541 56.27 43.73 1925 .. , 437.270 757,959 57.29 42.71 1920 ., . 415.860 794.935 52.31 47.69 1927 .. . 422.877 865.216 48.88 51.12 1923 ., . 406.911 866,391 46.97 53.03 1929 .. . 347,561 882,480 39.33 60.62 1930 ., . 297,932 916.987 32.49 G7.51 1931 .. . 262,662 918.428 28.60 71.40

General Net Dividend Mar. 31 licsmes. Profit. & Bonus. 1919 .. . £ . .. 13,815 £ 10 052 P.O. 10 1920 .. . . .. 34.220 24.881 10 1921 .. , . .. 41,214 10,472 10 1922 .. . • .. 40,705 7,721 7% 1923 .. . 11.131 7% • 1921 .. . 7,550 7 1925 .. . . .. 32,888 15.554 7% 1920 ,. . 9,531 7’A 1927 .. . D.OCO 6 1928 .. . . .. 31,350 9,052 6 1929 . . .. 32.088 11,033 c% 1930 .. . 11.949 7% 1931 .. , 12.350 TH

Management Gross Expenses. Profit. Ratio, £ £ 1918-19 .. 39.335 55.387 71.02 1919-20 .. 24.155 49.036 49.26 1920-21 .. 33,516 49,988 67.05 1921-22 .. 19.353 27.074 71.48 1922-23 .. 21.470 32,601 65.86 1923-21 • • .. 14.838 22,388 66.28 1921-25 .. 21,061 36,615 57.52 1925-26 .. 24.738 34.269 72.18 1926-27 .. 19.GG7 28,727 68.46 1927-28 .. 22.156 31.208 70.99 1928-29 .. 26.166 37,199 70.34 1929-30 .. 27.810 39.759 69.95 1930-31 .. 28.963 41,320 70.09