Dull Markets Affect Trading

Sun (Auckland), Volume 1, Issue 51, 23 May 1927, Page 2

Dull Markets Affect Trading

NATIONAL TIMBER COY.

NO DIVIDEND THIS YEAR

The combined effects of dullness in the timber trade and the disturbance of the company’s business by the destruction of its mill and plant by fire has resulted in the directors of the National Timber Company deciding not to recommend the payment of a dividend this year. After providing a reserve of £47S 2s lid for rates and taxes the profit is £lB5 Is 7d, which, added to the balance brought forward from last year of £12,772 5s Id. makes a total of £12,957 6s Bd. This amount the directors recommend should be placed to a reserve account, as it is not available for distribution, as explained in the auditors’ report.

The insurance received in respect of the mill and plant was £6,450 19s 3d. The cost of the new mill and machinery up to March 31 was £12,023 11s lOd, and the cost of completion is estimated at a further £SOO. When completed the mill will be capable of cutting 30,000 ft. of timber (log measurement) a day.

Gross profits for the year were £4,720, as against £14,159 in the previous year, and £16,410 in 1924-25. Administrative expenses were £3,013, as against £6,713, and provision for depreciation £1,522, as against £1,246. Assets are entered in the balance sheet at £96,178, the principal changes being an increase in plant and machinery from £12,074 to £14,610, while stock of logs and sawn timber is £1,528, as against £3,536.

During the year the company purchased the standing timber owned by the Tauranga Timber Company, containing 6,000,000 ft., which closely adjoins its own bush, and from the Government a further block adjoining the tramline, estimated to realise 4,496,900 ft. board measure.

“As a result of the tii'e,” states an attached report of the auditors, “the company has had to expend considerable sums above the amount for which the old mill was insured to construct the present up-to-date mill and plant. This, together with the purchasing of further timber rights, has made the company short of ready money, and, despite the fact that there are approximately £13,000 of accumulated profits, the payment of a dividend would be possible only by the raising of increased capital, which, at the moment, would be next to impossible, or by raising of further money on overdraft or mortgage, which would tend to reduce the value of the shares. Although Little profit has been made during the year the company is steadily getting into a sounder position. The accounts show that £1,522 has been written off tljis year in depreciation. This, together with the considerable sums charged annually to royalty account for the timber cut by the company on properties the timber rights of which it has purchased, will rapidly tend to improve the cash position of the company. That the assets of the company are appearing in the balance sheet at conservative values is evidenced by the fact that the book value of the assets destroyed by the recent fire was £952 below the value for which the assets were insured.’’