A HUGE CONCERN.

Auckland Star, Volume L, Issue 125, 27 May 1919, Page 7

A HUGE CONCERN.

FLOTATTOX EXPENSE , ?.

[Published by Arrangement.]

FARMERS' TRADING COMPANY MEETING OF SHAREHOLDERS. SEVEN HUXDRED ATTEXD. 8 PER CENT DIVIDEND. The annual mooting of shareholders in the Farmers' Union Trading Company, Limited, of Auckland, was opened in the Town Hall Concert Chamber at ten o'clock this morning, the purpose of the meeting, as set out in the convening notice, being: (a) To receive the directirs' report and balance-sheet; (b) to declare a dividend for the twelve months ending March 31 of this year; (c) to elect three directors in the place of | Messrs. James Boddie, Alexander A. 'Ross, and John E. Makgill, who retire by rotation, but ofTor themselves for reelection; (d) to appoint an auditor and ilix his remuneration; and (i>) to eon- ! siiler general business. About seven i hundred shareholders in the company, ! ladies and gentlemen. were present, i with Mr. James Boddie, chairman of directors, presiding. All the directors of (he company -Messrs. A. I). Hell, R. D. Dux Held. J." E. Makgill, A. A. Ross, E. Soraerville. and J. (i. Wynyard, Captain F. Col heck, and Major Lusk—were on the phi t form. Mr. Boddie, in moving the adoption of the report and balance-sheet, said he thought he could honestly claim that 111! was justified in congratulating the shareholders on the position to-day. (Several erie« of "Xo.") Continuing, Mr. lioddie said that taking into consideration the recovery tli«? company hud made ami comparing the position to-day with that of 12 months ago, he was justified in congratulating the company on its position, and in saying that they had reached a stage in the history of the company from which they woul.l go to better times. He intended to deal exhaustively with the whole position, and to give them a frank and full explanation, but lie did not intend to be J drawn into anything that would savour jof slinging mud. There was no doubt j about it there had been a considerable amount of criticism from various directions, which was perfectly familiar to a. great many. It was not his intention to enter into any argument, but he recognised that every public company had a I right to be criticised. He was present to state what the position was, and to answer any legitimate questions that Isrtanholders might ask. There might Li> (aspects of the company which were not J quite satisfactory, but it could not be jsaid that the directors had not given a [fair statement of the position. SHARKS ISSUED. On Mire!. 31 shares totalling 11(i..-)70 had been issued at £1, and at the present moment 128,070 shares had been issued. The number of shareholders nad been increased from ::<»27 to "iS.'iO in ten months, practically a 100 per cent increase, the subscribed ordinary capita! having at the same time been increased from £40,479 to '.110,570. While it was not necessary .it the present moment to call up i-.ny great amount of the ordinary shares, it was very desirable to have the ordinary shares well subscribe.) so that they should exceed, in value at any rate, the preference shares, because in so doing they were getting a good strong ordinary share list, and if the company ever decided that for development purposes they wanted additional capital they would then have the best possible inducement.

Dealing with the cost of issuing tho shares he said they had not adopted the UHiial course of employing agents or brokers, but hari disposed of them largely by advertising, and tho cost instead of being f> per cent, had been reduced to 3 per cent, while if the preference shares were included the cost would be reduced to 2 per cent. BALANCE SHEET. Coming to the balance sheet he said the total capital on March 31 was £219,530. Unfortunately in the early days of the company less can> had apparently been taken in regard to the application and allotment of shares, with the result that they found that there were quite a number of people who had never completed their shares. These were finally required to forfeit and the fihares had since been re-allotted to 180 new people, and to-day the capital account and share register was in perfect order in every way. It had been objected that it would hare been better not to have applied for shares when the directors discovered that matters were not as they should have been. That objection, in his opinion, was a reasonable one, but he would point out that no application was made until such time as everything had been investigated and the directors folt they were fully justified in froinir to the public.

There could be no possible question that for the first tinip in the history of co-opera "lon other interests were commencing to realise that the farmers' interests were becoming too big: and were inimical to their interests. There wan a determined effort to damage and wreck if possible anyone in the farmers" enterprises if it could possibly be done. As far as the Farmers' Union Trading Company ivas concerned he had no anxiety at all.

With regard to flotation expenses, he said that seeing that these had only been incurred during the past few months and that they were handling three parts of the present stock bought under the terms set out. that they had lifted a deficit of £11,750 and that day were etiil in a position to pay S per cent, on ordinary capital and 0 per cent, on preference shares, surely it would b? agreed that the directors had done all they could be expected to do.

Regarding lwlanee-shcet proper there was capital £310,530. There waa likely to bo difference of opinion concerning mortgages. These were set down art £4.3.440. In the early daj-s, when the company was trading with very little capital, it had to mortgage one or two of its properties, but t>.ero was £94,000 on the other side, representing freehold and leasehold. Rr-eognising that amalgamation of the two interests was comin", and realising, too. that an extension would soon be necessary, ths company succeeded in buying up the whole block of property adjoining the Hobson Street property to Kelson Street, and the negotiations were so well carried out that the property had been acquired before it became publicly known that the Farmers' Union was merging into this property, and that quick action saved the company many thousands of pounds. He passed oyer "Bilk Receivable" with the remark that it was very small indeed when the magnitude of the business operations was considered.

doing on to the item Fixed and Current Deposits, £118,322, Mr. Boddie said it represented a very real, very tangible, and very substantial asset. At a time when the company was in deep waters many farmers with a little money behind them had come along and offered sums to the company. And it was proof conclusive of the confidence of all people in the dealings of the company that not a single pound had since been taken out ""I

can assure you there w no overdue account; we have ample funds to cover all our working and other expenses, and this enables us to take advantage of every possible penny of discount, and to trade always to the very best possible advantage."

"Kon , , gentlemen," en id Mr. Boddie later. "1 come to the sum of £63.900, Laidlaw Leeds Business, and thin is the moment that I have looked forward to for twelve months. lam going to tell you now, at this, the first opportunity I have had of doing it, how this sum U made up, and the reason why it is there." The speaker went on to say that after a considerable amount of negotiation, and a very considerable amount of detailed investigation of one sort and another sort it wad decided to purchase the Laidlaw Leeds business. That was not done at the time because the price asked, not by Laidlaw Leeds, hut by the individual who wae pressing us to purchase, was prohibitive. But after calculation we entered into negotiations after detailed consideration of the whole proa and con?, whetiier the price was right, whetiier the valuation set down wae right, whether the stock was right. whether the goodwill was right, whether the directors were justified in purchasing this up-to-date modern business with accumulated funds and experience with it. All these tilings they carefully considered. There were other things, minor tilings that led them to do it, but it was only after hearing the most expert financial opinion that they decided to do it. The stock was purchased at it* value price, and at the same time the directors had had a value placed by reputable Auckland business men and valuers. The price set down by these valuers wae £113,000 for the stock on hand, but there was also stock coming forward on order, and on the water, which increased thfi value to £161, r )00. This was at a timo when there had been, on account of the war, a big rising tendency in prices, and the stocks on hand hart been bought, ami well bought, well forward by a buying organisation that wae the best and most efficient on the market. They had purchased the whole stock on two and α-half per cent, on the cost, and he had not tho slightest doubt that when in the ware, house those stocks could have been sold immediately at a great increase. Mr. fioddie then went on to work out, on the basis of the valuation of the stock, the goodwill of the business. Mr. K. 11. Hammond, of Hamilton, said the chairman had put the case before j them from the directors' point of view. | He had had a difficult task, he admitted,] but lie thought their difficulties had been ! largely increased by the manner in which | they conducted the business. Having' heard what had been said they could I only come to one conclusion, that the ! directors had shown a business ability well below the average. (Cries of "Xo, no; we can't , hear you.")

-Mr. Hammond, continuing, criticised the fact of the missing £'.1000, and said it seemed very strange to him that an employee could default to the extent of £!1(K)0 and the directors could not discover it till June 10 —more than two months after the default. Further, he considered that it was a great reflection upon the finance committee and the whole administration to allow an employee to default. He moved as an amendment that a committee be appointed to go into the whole facts and figures of the balance-sheet, with special reference to the "Laidlaw Leeds business' , entry, and that this committee be afforded every possible facility for carrying out the inquiry, and that further consideration of the report and balancesheet be adjourned pending the committee's report. Mr. J. Whitehead (Huntly West) supported the amendment and held that sufficient supervision had not been exercised or the state of affairs that was disclosed could not have occurred. Mr. Robert Laidlaw Raid he was perfectly satisfied that when Mr. Boddie agreed to the purchase of the business he believed the balance-sheet to be a perfectly correct one. It was not till they went to the Trading Company to take stock that they discovered that there was something wrong. It had to be borne in mind that when anyone deliberately set .out on a course of wrongdoing it was quite possible for them to do so for a very considerable period before they were discovered. The company had a great future before it, and had placed 212 new shareholders on the list during the past month,' and at l!ho end of the twelve months would have the biggest share list in the country. (Applause.) MR. BODDIK REPLIES. Replying to criticism, Mr. Boddie classed some of it as insincere in this— that it was hacking for other schemes to get the shareholders to enter other co-1 operative concerns outside Auckland. It was a queer thing, he s.iid, that all the criticism of the reports had come from a quarter that he had not expected. The critics were not the men who had a stake in the land and were bona fide farmers, but they were others, business men and townspeople all. Not claiming to be a business expert, he yet claimed to ha.c not forgotten the business knowledge and experience he had learned in a hard life in dear old Scotland. He had slaved through four years as an apprentice, and for eleven years in Edinburgh and Glasgow he had*learned the retail and wholesale business. Beyond that he had been a farmer for 30 odd i years. All Tie asked for one year more was to , give support and confidence. The direc- ; tors had served through a bitter, trying year, and if the meeting placed confidence in them to continue the up-grade work ;of the year gone past, and endorsed the report and balance-sheet, they would not be disappointed. AMENDMENT LOST. Then the amendment was put, and wae lost, the meeting being overwhelmingly in support of the report and balancesheet, which was adopted. A dividend of 8 per cent on ordinary shares and 0 per cent on preference shares was declared. ELECTION OF OFFICERS. The following was the result of the election of three directors, who retired by rotation: Messrs. .Tas. Boddie, 11731 i'?« S: t A » A - Ross - U69; J - E - Maksill, 1163; J. Harnian, 104. Mr. J. V. McKay was appointed auditor. j SPECIAL MEETING. A special meeting of the shareholders was hold subsequently, at which several resolutions, recommended by the directors, providing for the alteration of the 1 articles of association and the memorandum of association, were carried. I