Page 10 Advertisements Column 4

Waikato Times, Volume 122, Issue 20500, 17 May 1938, Page 10

MR. JOHN S. BARTON’S REPORT AND CERTIFICATE." " 1 To the Directors, Financial Services, Ltd., Todd Motors. Limited, and Wellington, Todd Motor Industries, Limited, sth May, 1988. Wellington. Dear Sirs, I have used your respective audited accounts as at 81st March, 1988, to provide and check two separate bases of valuation of the shares of Todd Motors, Limited, and Todd Motor Industries, Limited, which are to be pur • chased by the proposed new Company. Firstly, l approach the question, •*What asset-backing is there for the £250,000 of Preference Share Capital which the publio is asked to subscriber" I sought an answer to that question by a study of the assets scheduled in the Balance-Sheets, commencing -with their recorded book values and making all proper and justifiable adjustments on a conservative basis. I append a combined Balance-Sheet based on book values, and from that I prepared an adjusted Balance-Sheet bringing into account all unrecorded assets and values and disclosing clearly the consequent adjustments which 1 had made. I have allowed these adjustments only after a close and careful scrutiny and checking at all points. In the result lam of the opinion that the position revealed by the adjusted Balance-Sheet, vis., a backing of net assets worth at least £850,000 is established. Secondly, I approached the question, “What justification for a purchase pHce of £500,000 can be found in the profit-earning history and prospects of the undertaking?" I find that after allowing for all charges against profits, actual and contingent, the combined net profits of the two Companies for their respective last completed year, after provision for income tax, are as follows : Todd Motors, Ltd., to 80th September, 1937 .. .. £58,008 Todd Motor Industries, Ltd., to 81st March, 1938 .. .. £ 6,947 Total .. .. £64,955 A simple calculation can be made to use this figure as a check on our capital value above._ These profits capitalised at 7 per cent, justify a capital value of about £925,000. Calculated on the basis of the proposed capital of £500,000 they provide an overall return of 13 per cent. This would represent 26 per cent, on the preference share capital, and that percentage would cover the dividend on that capital more than four times over. These figures obviously lease a large margin for business fluctuations. The decision and undertaking of the Directors of the new Company to create out of future profits a Preference Dividend Equalisation Account equal to two years' full preference dividend ivill effect a substantial increase in that margin and that must tend to confirm the expectation which the profits to date reasonably raise, that the preference dividends can be maintained over a period of trade recession, if such should arrive. I have personally examined the accounts, books and records of the Companies and satisfied myself that the trading results have been arrived at with a due regard to sound business and accountancy principles and on a careful and conservative basis. Yours faithfully, John S. Barton. Chairman of Directors. EARNING CAPACITY: AUDITOR’S REPORT.—The financial results over the last five years, and especially the progress made since the Assembly Plant has been fully working, are shown by the following Auditor’s report:— Charles Todd, Esq., Chairman of Directors. Todd Motors Limited and Todd Motor Industries Limited, Wellington. Dear Sir,— In accordance with your request we hereby certify that for the financial years as set out hereunder, during which we have examined the books and accounts of Todd Motor Company, Todd Motors Limited and Todd Motors Industries Limit*d, the profits as stated were disclosed by the Companies’ books. These sums represent the net profits (shillings and pence omitted) after providing for all expenses Including depreciation, but subject to Income Tax. V Financial _ ~ _ _ Combined profits of Todd Motor Industries Todd Motors Limited Limited. and Todd Motor Co. (Tear ends 31st March) (Year ends 30th Sept.) £ —«■ 24,661 The Assembly Plant was opened at this stage making it possible for the Company to Import their vehicles C.K.D., saving duty and freight, reducing prices and thereby increasing sales and consequently profits. 7,454 24,661 10,951 J ®3B 1,015 48,092 49,107 84,775 (1) 1937 17,460 (2) 92,813 110,273 S «* t J ie fl l st y * ar in provision was made for the carrying fordeferred profits on Hire Purchase Sales, the total provision amounting to £35.608. (In previous years provision had been made for the deferment of only the interest” portion of the profit on such transactions.) The amount of this deferred profit £3s.66B—added to the profit £49.107—as shown &L the acc o un tß gives the figures of £84,775 as shown above, m, full year effective operation of the Assembly Plant. * fte *' et> Profits to date subject to Income Tax since the above complete years of the operating Companies were: Todd Motors Limited, 6 months to March, 1938 £61,826 Todd Motor Industries Limited, 12 months to March. 1938 12,347 TOTAL, under above two headings .. ~ ~ £74,173 Yours faithfully, ERNEST HUNT. TURNER AND HESLOP. The two operating Companies, though independent Limited Liability Companies, are ?- OS^i«;? peratl , nß .’, * T . o . dd t Motors Limited acts as Importer of the C.K.D. vehicles, s,» Sa ler and distributor of the manufactured vehicles, and carries on hire purnna!»«nlfCe^JrSliiSsi whereas Todd Motor Industries Limited assembles the vehicles on account of Todd Motors Limited. The whole of the profits of this inter-working twII be pooled in the new Company. TURNOVER AND STAFF.—The total turnover in the last complete financial year was fnr r T?,M ßl 'fr2?° f ? r , TO ? ( ! M ® t . or " < for >ear ending 30/9/37) and over £133.000 £1,452 000 M t ° r IndUßtries Llm,ted (for year ending 31/3/38), making a total of over M 9O t? eo P ,e , are employed throughout New Zealand In the assembling, products lo8 ’ ' rbo esa e and retail (including dealers)—and servicing of the Companies’ Both operating Companies are registered in Wellington. " 18 l ntend ed tha t the Accounts shall be audited by the same Auditors as those of the new company. The new Company’s financial year will close on the 15th November of each year.

LIABILITIES. BALANCE-SHEET OF THE TWO OPERATING COMPANIES as at 31st Maxch, Todd Motor Industries Ltd. UNSECURED LIABILITIES— Sundry Creditors Shareholders' Credit Accounts Deferred Profit 041 Hire Purchase Sales .. Unearned Income and Internal Accounts AUTHORISED CAPITAL—FuIIy Paid PROFIT AND LOSS APPROPRIATION A/C. Contingent Liabilities—£4so. 79.905 43.521 23,498 ASSETS. Todd Motor Industries Ltd. FLOATING ASSETS— Cash in Hand .. .. Investments Bills Receivable Sundry Debtors (Secured) Sundry Debtors (Unsecured) Stocks Work In Progress Life Insurance Premiums Prepaid Expenses and Sundry Accounts Todd Motor* Limited. £ 115.788 (7) 4,324 - -■■ 120.11 S 3,382 195.016 37,459 (8) <9l «10) 433.164 £553.276 CHARLES TODD, Director. DESMOND HENRY TODD. Director. In accordance with the provisions of “The Companies Act. 1933, * we report to members that we have obtained all the information and explanations we have required in respect of the accounts of the Company examined by us. and in respect of the above Balance Sheets, and that in our opinion such Balance Sheets are properly drawn up so as to exhibit a true and correct view of the state of the Companies' affairs according to the best of our information and the explanations given to us and as ebowD by the books of the Companies. ERNEST HUNT, TURNER AND HESLOP, Public Accountants, Auditors. Wellington, 6th May. 1935. (1) £04,000 on Courtenay Place and Wakefield Street buildings. Wellington, repay ahle_ 1/7/1951. interest 44-4} per cent. £3.500 on Tlmaru building, repayable 1/2/1942, interest 44 per cent. (2) Being profits for 12 months. (3) Being profits for 6 months. (4) Cost price. £19.240; Depreciation Reserve, £3.373 (5) Cost price £14.491; Depreciation Reserve. £5.667. • (6) Cost price. £7.149; Depreciation Reserve. £2',902 (7) Cost price, £129 232; Depreciation Reserve £ 13.444. comprising properties lt> Wellington. Christchurch and Tlmaru. (S) Secured by conditional Purchase Agreements (9) Including used cars and trucks valued conservatively at £®.724. which represent* actually less than 14 days' normal turnover of such vehicles. (10) Policies on life of directors with A.M.P Society in favour of Company. Member of a New Zealand Stock Exchange or to any Branch of the National Bank of New Zealand. Limited or direct from Financial Services Limited, ing, icatkerston Street, Wellington, C.l. (John S. Barton, C.M.G., Chairman ot Directors). Build-