WAIRARAPA FARMERS

Evening Post, Volume CVI, Issue 80, 15 October 1928, Page 12

WAIRARAPA FARMERS

FACING '.LOSSES . ©HAREHOLDERS' POSITION Mr. A. Bower Knight, chainnun of directors of the Wa'irarapa Farmers' Co-op-erative Association, Ltd., has issued a full statement to sharoholdes ,ot' the association and for the directors setting out the position, and the need/for certain amendments to the articles, which will be proposed at an extraordinary meeting of shareholders following the annual meeting to be held on 30th October. ■The'balance-shoot shows a paid-tip capital of £3(32,023, of which £112,023 is in ordinary .shares, and £250,000 in 0 per cent, preference shares. Other liabilities are reserve £0720, debentures £tio,ooo, feed deposits and deposits at call £12,771 3s 10s, accrued interest £474;1 Cfs -Id, bills payable .£3223 10s lid, sundry creditors £29,1)77 15s Id, Bank of New Zealand £104,507 iis !>d, employees accident and provident funtl £3000, others items £2132 7s Od. Assets include properties, less mortgages £203.053 10s 3d, plant £13,224 2s lOd, book debts £144,999 6s 4d, stocks £137/274 Is 3d, bills receivable £4229 2s, share investments £550, uncxpired insurance premiums £745 2s 3d, and balance to profit and. loss £85,001 ISs 2d. There is a contingent liability of £15,Q00. The. chairman stated that "about twelve months ago, it was made apparent to the board that a crisis had been reached, and steps were taken to effect an entire change in the management of tho association's affairs.. Mr. Joseph Caselberg relinquished the position of chairman and j managing director, and Messrs. David and Alfred Caselberg retired from the :board. Mv A Bower • Knight was appointed chairman, and three new appointments wore made, namely: Messrs. P. H. 'Nathan, R. J. Barton, and Charles M. Bowden were appointed in an advisory capacity. The policy of operations, particularly in the stock department, was substantially changed. "Mr. Bowden was subsequently appointed managing director. Messrs.^ Nathan and Barton have since retired from the board, the special purpose for which they were appointed having been fulfilled. Whilst members, of the board, they rendered valuable service to the association. Mr. Martin Elgar has been on leave of absence for almost the whole year, on account of ill-health. . "In the districts over which we operate, business has been, quiet throughout the whole trading year, and in many departments prices had to be reduced to meet intense competition. Stocks have been substantially written 'down, . and are well assorted and suitable for the trade. The new trading year has opened more brightly, and better results arc confidently expected. "The association was unable to pay the dividend on preference shares for the year just closed. Intimation was given some weeks ago that tho board proposed to ask preference shareholders to forego thfiir claim to that dividend. On further consideration, however, the sum of £15,000 under this head will bo paid as opportunity oilers over ensuing years. Preference shnveholders, therefore, will not be asked to make any sacrifice. No dividend will bo paid iv respect to ordinary shares. , The hoard has declared a bonus rebate on shareholders' purchases (commission goods exceptcd)' at tho rate of 2 per cent.-in respect of tho past haltyear. ■ , • ■ OVER-LIBERAL ADVANCES. "During the current year, the board thoroughly investigated the book debts, and in particular tho accounts secured to the association for .advances made. Examination disclosed that advances to many ; customers had been made by-tho management in former years on an over-liberal scale, without the knowledge of the board. When- unfavourable seasons came, many of these customers had no chance of carrying, oh successfully, •or of being able to pay the 'amounts, owing by them. In such cases, the securities held by the association being inadequate, it was deemed wise to .liquidate the accounts and lace the loss, in other instances, the association wrote down its mortgages, or stock securities, to figures which should enable those ' concerned to continue operations with prospect of eventually making good, and in most cases this- expectation is in a fair way of being realised. . Wherever possible, , every endeavour, was used to keep mortgagors and. lessees \ on-, their farms; and in future years the association should reap the benefit of this policy. "In 1927 report aiid accounts,. it was shown that the properties of the association were written up pursuant to expert valuation received. The-sum of £88,(501 2s 7d was taken to- credit- of a reserve .account nmler this head. .. Having regard to changed trading conditions, the board deems it advisable, now to reduce these book values by £50,272 ISs. '-Ortho amount mentioned as having been credited to reserve account, the sum of -.681,934 16s lid was used to provide for ascertained losses tinder advances made. . . .CAPITAL TO BE WRITTEN DOWN.. "Substantial amounts were debited also ■in previous -years on account of bad debts. Nevertheless, it has been necessary to provide in this year's accounts a further sum ■of £57,094 Ha 3d. The result is a debit in appropriation account of £85,091' 18s 2d. The board considers it- advisable to treat this debt as a. loss of- capital, and .write it off against tho ordinary share capital. . . .The subscribed capital is ■61-"'0 554, and writing this. dpwi». by 13s il in tho £ will provide £SO,3SQ 6s Bd. In addition, the board recommends the transfer from reserve account of £4702 lls Gd, '■making a total,of £85,091.185'2d: ■ These amounts will eliminate tho" debit ••balance ia appropriation account. It is also-re-commended that, the £5 shares be subdivided later into shares ot £1 each, lnc cli'ect of these proposals will be to convert all the ordinary share capital into Shares of (is Sd.. Each'.£s A share will bo exchanged for five of the new shares, and each £1 B share for one new share. • "Shareholders will recognise that this proposed reduction of their captial will •not reduce the amounts of luture dividends which will be payable. Though the rate will be different on shares of 6s Sd ■\talue from that which would apply to shares of £1, the fund available lor distribution as dividend can only be the ■profit made. , ' .' "In conclusion tho directors realise that the association, like several other organ i.sa.tlons in New Zealand carrying, on .similar business, has passed through a crisis, and that its interests have sultered severely thereby. The board is of opinion that the interests of the association will best bY served by not delving into past mistakes, but by concentrating on future policy and operations. • Drastic action has been taken to meet the position, and the board looks Forward now with' confidence to the future. Loyal ■ support of Shareholders and friends will assist in quickly restoring the association to a divi-dend-paying basis."