H—3B

Of these, the reserve and investment fluctation account, representing undivided profits,, stood at £152,039 in 1937. The increase by 1944 was therefore £29,758. The undivided profits in the balance of the profit and loss appropriation account increased from £44,212 in 1937 to £48,464 in 1944. In addition, the company's assets have been heavily written down in the company's books (R. 4066 ft:., 4077, and 7302). 383. The Campbell and Ehrenfried Co., Ltd., presented a statement of their position from which we take the following : since 1937 the company has paid the following dividends : 1937,15 per cent.; 1938,17| per cent.; 1939 to 1944,10 per cent, each year. The company also submitted the following statement for the years 1935 to 1939 ani the year 1944, showing {a) its net profit; (b) its taxation ; and (c) the balance available after payment of taxation :

384. The Campbell and Ehrenfried Co. also presented a statement in respect of its managed hotels for the years 1937, 1938, 1939, and 1944 which showed very substantial profits, except in respect of one hotel, the Star at Auckland, which showed a loss for the year 1939 of £2,370, but a profit for the year 1944 of £19,097, though, for income-tax. purposes, there had been a loss of £4OO for the year ended 30th April, 1939, and of £1,300 for the year ended 30th April, 1940. For the purposes of the company's books there was a loss of £2,370 on the Star in 1939. It should be noted that in 1939 the Campbell and Ehrenfried Co., through the Commercial Hotel (Hamilton), Ltd., built the new Commercial Hotel at Hamilton at a cost of approximately £lOO,OOO. 385. The Campbell and Ehrenfried Co., has been a very profitable company. The net profit for 1938 before payment of tax was £51,935, which represented approximately 80 per cent, of the cash actually invested by the shareholders in the company. The net profit before tax for 1944 was £105,994, which was 164 per cent, of the cash capital of £64,398 left in the business after the company in 1929 returned to its shareholders the sum of £150,000 (Ex. A. 64, p. 16). The difference between profits and dividends, less the tax, was, of course, used to increase reserves. 386. This company has extremely large reserves in its assets. It values its freehold properties at £105,105. It owns nineteen hotels. Included in these are the six hotels purchased since 1935, plus one in which the company has a half share. The cost of these six hotels and the half share is given as £128,000. This amount is more than the value which the company places on all its nineteen hotels. This company also values its 50,407 shares in New Zealand Breweries at £18,712, though on the present market quotation the value of those shares exceeds £2. They are thus valued at £18,712, as against their market value of (say) £lOO,OOO. 387. We refer also to Dominion Breweries. Formed in April, 1930, this company commenced to pay dividends in 1936, when it paid 6| per cent. The dividends were then as follows : Per Cent. Per Cent. 1937 .. .. .. 9 1942 .. .. ..7 1938 .. .. ..10 1943 .. .. ..8 1939 and 1940 .. .. 12 1944 .. .. .9 1941 .. .. .. 8$ 1945 .. .. .. 9£

85

Land, Income, Year. Net Profit. Social Security, and National Balance. Security Tax. £ £ £ 1935.. 26,997 5,055 21,942 1936.. 34,585 6,086 28,499 1937.. 42,547 14,979 27,568 1938.. 51,935 19,753 32,182 1939.. 43,411 21,169 22,242 1944.. 105,994 84,788 21,206