Morris, Hedstrom Ltd.
pp. 41-42 · Read in the full issue
Steady Dividend Though Profits Fall
Morris, hedstrom, limited, Islands merchants and traders, with branches in Fiji, Tonga, and Samoa, re port a gross profit of £106,953 for the year ended March 31, compared with £111,863 for the previous year, and a net profit of £30,798, compared with £36,164. Ordinary dividend is maintained at 4 per cent., and with preference divi dend of 6 per cent., dividends require £33,968. The carry, forward is then £34,456. Though no addition has been made to the general reserve, £3474 has been added to the insurance reserve.
The directors report that no provision has been made for income tax from the year’s accounts, as they consider the pro vision already existing is adequate. Lau toka and Ba branch accounts for the full period are for the first time embodied in the company’s profit and loss account.
This explains why economies effected during the year are not apparent in that account. Normal provision has been made for depreciation, but no attempt has been made to deal with the abnormal reduc tion in both realisation and utility values of properties brought about by the fall in the price of copra.
In Suva, and in most of the sugar dis tricts, trading results have been satis factory, but in the districts dependent upon the copra industry trading has not been profitable, in addition a heavy loss has been sustained owing to the rapid decline in the price of Samoan cocoa dur ing the year.
Copra’S Prospects
Speaking at the annual meeting of Morris, Hedstrom, Ltd., at Suva, on June 22, the chairman (Sir Maynard Hedstrom) said the prospects for the coming year were “mixed.”
Fortunately, a substantial portion of the company’s assets was invested in districts which were not dependent on the copra industry and in those districts prospects for the coming year were rea sonably good. On the other hand, it would be idle to hope for any reasonable
return this year on capital invested in copra districts, although certain heavy losses in some of those districts which were experienced in the year ended March 31, 1934, were not likely to be re current.
Last March sales of copra were made at £7/5/-, compared with £12 per ton
in March, 1933, and £27 per ton in March, 1928. The directors were not prepared to assume the present values (which, gene rally speaking, were below the cost of production), would be maintained for an indefinite period. They had not at tempted this year to deal with the ques tion of depreciation in the value of assets
Year Ended March 31,
1932. 1933. 1934. £ £ £ Gross profit 104,072 111,863 106,953 Net profit 23,610 36,164 30,798 Div., pref., 6 p.c 13,152 13,152 13,152 Div., ord., p.c 4 4 4 Div., ord.. amount 20,816 20,816 20,816 Forward 35,431 37,626 34,456
Liabilities
Capital: Preference 219,206 219,206 219,206 Ordinary 520,407 520,407 520,407 General reserve .. .. 80,000 80,000 80,000 Insurance fund res. .. 33,069 35,099 38,573 Bank 12,299 — —:— Depositors 25,532 12,419 9,552 Creditors 8,194 15,200 12,313 Charges accrued due .. 2,018 3,028 2,318 Suspense 6,143 9,917 7,326
Assets
Plantations 67,173 65,523 57,455 Land and buildings .. 273,545 312,169 307,276 Floating stock 7,023 12,800 17,274 Plant and fittings.. .. 4,860 6,792 6,904 Merchandise 143,608 186,187 187,939 Produce 25,377 26,089 33,533 Branches and due by subsidiary companies 94,437 65,705 70,300 Debtors 95,166 122,327 110,733 Prepaid items 2,429 3,268 2,698 Cash 32,150 19,558 22,844 Shares, debs., & mortg. 213,513 122,166 124,178 Total assets .. .. 959,285 949,888 941,137
in copra districts, but if present condi tions continued for any long period it might become necessary to deal with this question.
It might then be decided to devote the major portion of the reserves of the com pany to the writing-down of the value of assets in districts which were depen dent upon the copra industry. The company’s insurance reserve of £38,573 was intended for protection against marine and hurricane risks of the com pany; fire risks were covered externally.
The value of floating stock had been increased by amounts expended on the purchase and construction of a small steel motorship for use within the Fiji group.
It was now being assembled at Suva.