Egmont Box Co. Shows Improved Financial Position

Taranaki Daily News, 1 September 1942, Page 6

Egmont Box Co. Shows Improved Financial Position

Uncalled capital may be considered safe. Chiefly through the sale of its National Park bush and bush development, and the reorganisation of its accounts, the Egmont Box Company Ltd. has been able to show a better financial position than for a long period. Representatives of the shareholding dairy companies at the annual meeting at Eltl", m yesterday congratulated the directors on the position. "It is the most interesting report and balance-sheet that we have had, principally on account of getting rid of the most troublesome part of our business — the milling end," said the chairman of directors, Mr. T. A. Winks. The company was able to dispose of almost all the Taurewa block. The Taurima end was discarded as impracticable for milling because of the difficulty in laying tramways, but the "pockets" were being cut out on a royalty basis by an operator using motor-lorry transport. The rest of the company's units, the mill at Eltham, the factory at Hawera and the batten factory at National Park, were operating, and were well worth carrying on. "The balance-sheet is a bit complicated," Mr. Winks continued. Money held in depreciation reserve had been brought back into the operations again by consent of the Land and Income Tax Department, and the books had been brought into line with the change by the acting secretary, Mr. H. H. Spurdle. "It might look ambiguous and contradictory but the loss is due to book-keeping," Mr. Winks said in referring to the balance-sheet. "If we had not done that it would have meant very hea'vy taxation next year when we expect to make a considerabJe profit." In the first place the company had sold about half the bush to the Dominion Timber Company, revenue being on a royalty basls, anticipated to be about £16,000. A deposit of £4000 was being held payable at the end of the company's cutting rights, leaving an asset , of £12,000. The balance of the bush had been sold to the Pokaka company for £33,000, £25,000 deposit having been received, the balance of £8000 being held on mortgage repayable at £2000 a year. The National Park batten factory had been sold for £6000 — £2000 deposit and the balance to be repaid at £2000 a year after the other mortgage had been paid.

Estiniate of Asscts. The Taranaki permanent forestry block at Koru, bfing paid for at the rate of £436 a year, was worth much more than the £1880 already paid, said Mr. Winks. With stocks of timber £23,000, stores £1463 and war loan £590, the assets totalled £52,933. In addition the Eltham mill at £4000 and the Hawera factory at £8000 were very conservatively estimated, for over the past seven years the nett profits had been £2500 from those sources. The grand total of assets was £64,933 and the bank overdraft was £10,600, with current accounts almost square, leaving a balance of assets of £54,333. "There is no fear, as far as the capital is concerned, that it will ever be called up," declared Mr. Winks. He added that the company hoped to receive a greater allocation of crates and boxes from the control board this year, and that would realise a good profit. Stocks of timber in hand were valued at cost at between £13,000 and £14,000 and, as various mills were supplying timber, the company could take on contracts for crates. The directors' report stated that the loss disclosed in the sale of bush trading account was £9161 12s 7d and thal was the direct cause of the profit and loss account showing a loss of £8299 153 2d, without which the profit would have been £861 17s 5d after meeting heavy depreciation and a nominal bad debt allowance. "I think I am ; justified in saying that the uncalled capital which has been perturbing shareholders may now be considered safe. The balance of mortgage from the Pokaka Timber Company alone will be sufficient to liquidate the company's bank overdraft," reported the auditor, Mr. H. A. Lennon. The difference between the trading account loss of £9161 and the nett loss of £8299 was £862; if the account had not borne a very large iproportion of the depreciation charged on National Park a very substantial profit would have been shown. The turnover in 1941 was £179,855 and in 1942 £98,016, a decrease of £81,839. As .the Dairy Board was operating the cheese crate pool the company's turnover in that respect was reduced by more than £50,000 and cessation of milling operations accounted for the balance. Fluid assets were £31,097, current liabilities £15,607, a surplus of £15,490. The deficiency the previous year was £14,647. In explaining the altered book-keeping system Mr. Spurdle said it had not been considered advisable to have a big depreciation reserve with big accumulated losses. Also depreciation reserve had been reinstated on the Eltham and Hawera assets, otherwise they would have 1 been exhausted in two years' time.