SOUND FINANCE

Dominion, Volume 18, Issue 11, 8 October 1923, Page 8

SOUND FINANCE

N.Z. FARMERS’ CO-OP. ASSN. BALANCE-SHEET LOSSES WRITTEN OFF FUTURE PROSPECTS VERY BRIGHT At the annual general meeting of shareholders of the New Zealand Farmers' Co-operative Association of Canterbury on Saturday the chairman of directors announced that it had been decided to write down all ascertainable losses and to set aside a sum of £40,000 as a special reserve with which to meet further prospective losses. The money, it was stated, had been lost in standing by some hundreds of struggling farmers, as well as many soldier settlers. The proposed writing down of capital, it was pointed out, would in nowise affect the stability of the association. After fully providing for every contingency there still remained a surplus of assets amounting to nearly £1,000,000. After a full explanation of the association’s position, directors and shareholders were almost unanimously agreed that the future prospects of the association were particularly bright.

By Tei.egba.pk—Press Association. Christchurch, October 6. The annual general meeting of shareholders of the New Zealand Farmers’ Co-operative Association of Canterbury, Ltd., was held to-day, the chairman of directors (Mr. J. A. Pannett) pressing. In the course of his statement the chairman said: “It must be conceded by all who have carefully compared this year’s statement of accounts with that of last year that the balancesheet now before the shareholders cannot be truthfully described as altogether unsatisfactory, especially 7 when all the surrounding circumstances are

taken into consideration. The document certainly emphasises the wonderful recuperative powers of the association —powers that, in my opinion, flow from the essential underlying principle of co-operation upon which the associa-

tion is based. When 1 addressed shareholders this time last year, in commenting upon the matter* of our merchandise stocks, I voiced the opinion of experts that the depreciation allowances then made were ample. Unfortunately, through continued financial stress, particularly through (jie earlier period of our year, values of goods in many sections suffered . further pre-

judicial fluctuations which necessitated additional writing down to the extent of £73,140, and which is mainly responsible for the adverse results of our year’s trading operations. It seems to me only fair to ourselves that I should point out that the continuous clescent of prices of merchandise was entirely beyond our control. Even the most alert experts failed to anticipate or to estimate the extent of the collapse. Practically every business concern in the Dominion—in fact, tho world over •—suffered in like manner, and very

many collapsed under the weight of their losses through slump. When we remember that our total stocks stood at between £700,000 and £BOO,OOO when tho drop set'jn, the losses we have sustained are, 1 believe, a good deal under the proportion of many other firms. At the present time cur stocks are down to a very low and safe position, and I feel thoroughly satisfied that no further troubles need be apprehended from that quarter. In the previous year’s balance-sheet it was indicated that in addition to the losses then shown through a number of foreclosures a further amount was inevitable. The continuance of the money stringency rendered it impossible for many of our people to carry on. The several positions were carefully gone into, and wherever it was considered a fighting chance existed for the man to make good and pull through the association stood by him, and it is extremely gratifying to be able to state in this connection that the great jority have pulled through, and their respective positions to-day are upon a safe and satisfactory basis. The splendid recovery of stock and produce values has, of course, materially he’ped the position. There were unfortunately many others upon our books whose affairs owing to the effects of the slump were so out of bounds that we cculd not sanction further aid, which meant winding up, with the inevitable result that the association suffered less and the unfortunate producers lest their all. Under these very trying circumstances the board decided upon the adoption of every possible measure to determine within the period all ascertainable losses—which was done—with the result, as the balance-sheet shows, that the sum of £75,125 was vritten off, and to provide for further prospective losses the sum of £40,000 was set aside as a special reserve. The total deficit amounted to £214,155. I consider the bold course which your directors propose of meeting the position is the right one and the best one to adopt, ‘and I trust shareholders will accept the jxisitioii with equanimity and mark their continued Ic.’alty to the concern by supporting tho proposal. No good ]>urposc, as far as I can see, can be served by the pursuance of any other course. The money has been lest mainly in standing by hundreds of our struggling farmers, including many soldier boys who took to farming. I frankly admit that in the light cf our experience through the past tyo years the association, in common with practically all other businesses identified with producers, has been too liberal m the matter of its financial assistance, and the board is resolved upon the pursuance of a more conservative future policy. In this respect the future prospects, as far as one can judge are most promising. Indeed, I rever knew a period when tho 'outlook was more Hopeful, and it is largely because of this that vour board propose to wipe out the deficit to permit of an early participation by one and all ci the satisfactory profits which I am sure will again accrue to us. Hie p’oposed writing down of capital and appreciation of the projierties will in nowise lessen the stability of the association lor after fully providing for our bond issue, deposits, moneys to the credit ol shareholders, current recounts, bank overdraft, and every other liability there remains a surplus of assets amounting to nearly £1,100,000.

In a discussion on the motion for the adoption of the report and balancesheet, Mr. F. H. Bowler said he did not wish to suggest that the balancesheet was entirely satisfactory. Some of the shareholders might be disposed to call the balance-sheet a. bad one. There were others who might be inclined to call it a damned bad one. They were in the position that every other similar organisation in the Dominion was in. At this stage there was a clamorous call for the speaker to hurry on, and he was interrupted frequently, and eventually was counted cut, resuming his seat amid applause. Mr. A. D. Hassall said the highest and truest wisdom would be shown by shareholders in loyally supporting the association. With returning prosperity to the Dominion, the company would return to prosperity. Some sacrifice might have to be made, and shareholders should! support the management. Pressure on the part of district shareholders had been responsible for many branches that had not done well being opened Mr. W. T. Esson, assistant general manager, said that he would like to make reference to tho persistent statement which had been in circulation since he had resigned from the Bank of New Zealand. The statement was to the effect that he had been put in by the Bank of New Zealand —or, in other words, that he was a receiver. He wished to give this an emphatic denial, and he read a letter he had received from the bank concerning his resignation. Judging by some of the comments he had more confidence in the association than many of the shareholders had in their concern. Nothing he had learned since he\took office would shake his confidence in the concern. Tlie reason why the association has weathered the financial storm was that thev had the backing of the whole of the country. The positi.i of the association at present was that shareholders bad bad their cake and had eaten it. Now they must help to make another cake. Mr. J. Connolly said they should be courageous. A few years ago they met and were prepared to carry the directors shoulder high to an hotel and toast them. Mr. Esson knew the ramifications of the company’s financial position, and he was not likely to come to a sinking ship. After a fairlv lengthy discussion, most of which was good tempered and sympathetic with the directors, the motion was carried with not more than half a dozen dissentients. The retiring directors and auditors were re-elected.