TRADERS' FINANCE CO.

Auckland Star, Volume LIX, Issue 289, 6 December 1928, Page 4

TRADERS' FINANCE CO.

FOURTH ANNUAL REPORT.

MORE LOSSES WRITTEN OFF.

PROPOSED CAPITAL REDUCTION

There will again be no dividend for ordinary shareholders of the Traders' Finance Corporation this year, and in addition they are to be asked to allow their shares to be written down in order to wipe out heavy losses. In their annual report for the year ended September 30, the directors state as follows:— "The turnover for the past year has been satisfactory, but owing to competition the rates were reduced and the net profits for the year were £11,461, as compared with £12,576 the previous year. The accounts referred to in the last report have not yet been finalised, and it is estimated that by writing off £9900 this ,u;.r, provision will have been made for contingent losses, and this has accordingly been done. Your directors recommend payment of a dividend of 7 per cent per annum on the preference shares, of which an interim dividend has already Il3en paid, and the carrying forward of the balance of £293. The preliminary expenses is now the most unsatisfactory item in the bal-ance-sheet, and this in the ordinary course would have been eliminated this year. Under the circumstances your directors recommend that the ordinary shares be reduced 2/6 each, which, if approved by the shareholders, should enable payment of dividends on all shares to be resumed the coming year, and a reserve to be accumulated. Messrs. Robert Burns and J. A. Gillett retire from the board in accordance with the Articles of Association, and offer themselves for re-election." The following shows items from the Profit and loss account during the past three years:— TROFIT AXD LOSS ACCOUNT. 1926. 19L'7. 1928. £ £ £ Gross profit 15,007 16.289 15,795 Expenses 2,548 15,712 14,233 Directors' fees .. 250 230 250 Dividends 5,286 7,155 2,328 Income tax .... 3,008 — — Net profit 13,058 076 1,469 The dividend, £7155, is for the two half-years ending on September, 1926, and March, 1927. The following are the chief items from the last three balance-sheets:— LIABILITIES. 1926. 1927. 1928. £ £ £ Capital (paid up) 103,614 108,515 108,465 Sundry creditors 88 551 522 National Bauk. 12,295 17,174 32,060 Deposits 9,407 8,814 10,050 ASSETS. 1926. 1927. 1925. £ £ £ Advances 123,917 123,389 128,421 Sundry debtors 125 277 141 Farm property, stock and impleiueuts .... — — 10,085 Formation expenses— Legal expenses and advertising 1,009 1,009 1,009 Establishment expenses and brokerage . 14,000 13,269 13,269 This company, which was formed in 1924 primarily to conduct a motor vehicle finance organisation, has a nominal capital of £300,000; 33,577 £1 preference shares and 10,000 ordinary are fully paid up; 128,888 ordinary are called up to 10/ and 50 to 7/6. The company can therefore call up approximately another £65,000 if necessary. So far its results are not inspiring, and serve to emphasise the extreme care which is necessary in dealing with the motor car bailment system, Particularly when second-hand vehicles art included as a basis for security. Last year no dividend was available for ordinary shareholders, and it was explained that to meet the contingency of an unfortunate Wellington account the sum of £12.000 had been written off. At the annual meeting efforts were made to ascertain the full extent of this loss, but it was stated that pending litigation and realisations would affect the issue. To further questioning the chairman said the original account was £25,000 which was supposed to be covered by securities. It now appears that a further £9900 has been written off to provide for this unlucky transaction, making a total of £21,900, and it is not clear that this will completely settle the company's interest in the matter. An addition to this year's balance-sheet is an asset of "Farm property, stock and implements." On the surface this appears to be outside the original intended scope of the company's operations, though doubtless well within the Articles -of Association, and the directors will probably throw some light on the matter at the annual meeting, which is to be held on December 14.