FARMERS’ CO-OP.

Hawera Star, Volume XLV, 30 June 1925, Page 8

FARMERS’ CO-OP.

ANNUAL MEETING

PROFIT OF £1238

The annual meeting of the Farmers’ Co-operative Organisation Society was held in the Foresters’ Hall, Hawera, tp-dav,. ivhen Mr. A. Hunter, chairman of directors, presided oyer an attendance of about sixty shareholders. Those whose calls were in arrears were not admitted.

The directors’ report was as follows DIRECTORS’ REPORT.

Tlie directors’ report was as follows: The profit and, loss account snows that , after providing for current expenses, depreciation on working plant and bad and doubtful debts, the net profit fqr the year aimouuts ±o Dixring the yean* i interact ait the lUite ol 6 per. cent, per onnuim was paid to shareholders' on amounts paid in advance of calls, and whilst your directors regret the remaining profit does not waruat the payment of a dividend, they feel sure that shareholders will recognise that the year under review has, been a, good one. Stocks are clean, and it dsa anticipated that each year from now on will show a, isnlhstanfial increase in business' with correspondingly tetter results.

Directors. —The retiring directors are Messrs. Alexander fifunter, IV'. G. Beltoii, H. A. Foreman, B. G. Lysaght and J. B. Palmer, who have been nominated for re-election. As no further nominationsi have been received for the office of director, an election is unnecessary.

Auditors.. —In (accordance with the articles of the society, Messrs. Bu.rdekin and AYalkley retire, but again offer their services under the firm frame of Messrs. Burdekin, Walkley and Qameron. CHAIRMAN’S ADDRESS.

In moving the adoption of the report and balance-sheet, Mr. Hunter ■said : You have for consideration today the eleventh annua] report and balance-sheet. Two further cads amounting to »£1 per share were made during the year totalling £21,865. .Of this aniount £8447 has been collected, increasing the paid-up capital to £155,581. including calls paid in advance amounting to £7932. The calls in arrears now total £32.644. I take this opportunity of thanking all those who have' loyady met their obligations, in seme cases at no little inconvenience to themselves. Owing tq the stringency of the past few years many could riot pay, and the board decided to allow time in such cases: hut some who could pay have taken .advantage of the position to evade their liability. It is the intention of the directors to proceed with the collection of their money. The mortgages show a reduction of £IOSO, the amount being £14,400, spread as follows :

Fixed deposits for the fast thre<* years are:— . .' , 1923 1924 1925 £84,303 £66,278 £54,733 Ihe decrease from last year is £ll, 545. These deposits fal] due as follows 1925: £11,127. 1926: £34,590. 1927: £5816. 1925: £2600. 1929: £6OO. Some of this money will probably be r.e-deposrted, but tlie bulk will most likely be lifted as due dates arrive Fy adding the amounts of the mortgages for each year, you wi'l 'see whim .we have to prepare to meet. The hank overdraft, Josh cash at branches avid in transit, .show:'. : 1923 ' 1924 1925 £48,597 £77,052 £70;B17 ' The decrease from hast year is £6,435. The‘a in on nt is far too high, and'shows that wo are leaning to heavily; oii the bank instead of trading '"on our own capital. *• - ' ' UNCALLED, CAPITA L The uncalled capital, aiy.ount-j. +o £78,930. less calls paid in advance £7932, leaving a balance of £71,001. This is spread over 4500 namjs, Jess, than £l6'each. The sane thing to do is to pay up the; remaining £3 iei share, and work mostly oil cur own capital. \V« have reason t> behove that if we do this die hank will allow us a reason a lie oyer T.vift, ,5 uFiriciit to coyer the peak load of the winter and spring, and that without ai.y jt uit and Several guarantee.

To (fltnc to the assets sick;, the tie crease of £1.738 m p:\jpeitios was caused by the sale or a part of the' Havyera accommodation i.uiook .to the Railway Department. The depreciation written off plant, which includes stock cars, is £1792. Our auditors consider this is not sufficient, so the cxeciure have taren steps.to go thoroughly into iho matter. 'Stocks on hand ar - 1925 1924 1923 £•39.674 £62,480 ■ £57.250 Tire decrease from fast year is £22,• 806. Tliese are low, hut a considerable portion of the reduction is due to the closing of the hardware store in Ha wera. Provision-has been made in the produce store for a considerable amount of the balance, and some has been distributed among branches. It is intended in the future to confine our stocks to fanners’ lines. The stock* have been eareful’y valued. and the amount stated is considered to be conservative. while that classed as '‘de id” stock is practically nil.

Sundry debtors a.rc:— 1925 1924 1923 £195,378 £174,523 £116,821

The increase from last year is £21),855. This amount is spread over 2620 names, anjl of it £101,852 is classed a.v secured and £93,526 as unsecured, in some cases, although the securities were ample to coyer advances, they ijavb depreciated, leaving little margin, and m some thorp will be be a 'q's'fp '1 he unsecured accounts are mainly of ••short duration, moneys/ to he' collected fqr stock recently sold, etc., and precautions arc' taken to see that as fin' as pssib’e credit is npt allowed except dr.-i c clients aie considered safe. Shareholders; however, lean too hea /by on the society 7 causing a severe strain' on our resources. t If from the total assets we deduct the last tufb Sterns, cash in hand and J l '. aiid L. Appropriation ■ Account, and also the amounts clue to creditors (£41,559] we haye .'eft a balance of £279,308, which is the amount used to fun the business.- Of this .sum shareholders have found only £155,581. .Obviously too inuoli credit is expected and is allowed. We have done.our best to help clients wherever there " .seemed a reasonable ch’ajtoe of recovery, and wherever that is. not possible the sooner a man gets out the- better for himself. ... - , As regards the produce business, it is just a question as to whether it should not. he inn on a cash basis. Credit necessarily increases the cost of goods, besides being a factor in dulling the sense of financial responsibility.

PROFIT AND LOSS ACCOUNT. The gross receipts show a decrease of £1766, merchandise and motors, woo) and land commissions showing a drop totalling £4526, while stock commissions and interest show an increase of £2760. On the expenditure side all items save four show a substantial decreasesalaries and wages, £532; interest and exchange, £665; agents’ expenses (including motor repairs), £678; rents and rates, £386; repairs and maintenance, £302; stationery, printing and advertising, £199 ; legal, £4B; luel, ’iglit and power, £3O; total, £2960. The increases are: Travelling expenses, £43; bad debts, £470; directors’ expenses, £1; depreciation in plant, £337; total, £B5l. The balance is a net decrease of .02960 in expenses. THE DIVIDEND POSITION.

The faihwe to pay dividends during the past couple of years has disturbed the minds of many shareholders, and charges have-, been made that it was owing to extravagance, over-staffing, etc. Vo 11 will remember that after tlie slump I stated that the directors had decided on the policy of writing off bad debts, as they became more or less certain, and writing down stocks as the prices fell, and so spreading the loss over at least five years. The alternative was to have estimated the total possible losses,-and written off the amount at thp time, and to carry it to a iogica; conclusion, to have written down the share capital by- such, amount —and for tlie purpose from 35 per cent, to 40 per cent, would have been necessary to have made certain. Then we could have paid dividends for each year since that. After the , "pill” had been swallowed, it would have had an appearance of prosperity, and probably the directors and manager would have been putted on the back, but we would not have been so well -.off as we are now. The loss shown bv our balance-sheet in 1922 was £23,186 IDs 4d, including' £2868 of bad debts, and the aggregate amount of bad debts for the other four years, 1921, 1923, 1924 and 1925, is £7160 13s 6d. The loss up to the end of last financial year was therefore £30,347 12s lOd, a little over 23s per share. Deducting the amount now standing to the debit of Profit and Loss, £17,516 4s 9d, we have the sum of £12,831 8s Id. The depreciated share capita] has therefore been reinstated by that amount, nearly 10s per sharp, and equal, to over 3 per cent, interest on the average paid-up capital for the last three years. Presuming that the capital had been written down

by 40 per cent., it would have been necesasry. -to have paid a dividend of 5:28 per cent for the same period, to have equalled this result, and a further 1.25 per cent, in earnings would have been required to pay the income tax. These figures do not include the depreciation in stocks or plant caused by receding prices, except for the year 1922, when it would be included in the loss shown, less, of couwse, any profit made in that year’s trading. To ob-

tain even an .approximate estimate of the aniount would entail, a very careful scrutiny of the stock sheets for the past- five years, but it must be no small snip. The loss, reinstated capita] and earnings . pientipiled before would all be increased by this amount, and the income tax proportionately. ( As I mentioned, there will be more

bad debts yet to write ,off. The amount is difficult to '(estimate, for much depends on the seasons apd markets. A couple of good seasons sometimes sets a man well on the way to recovery, while a bad one may put him past the limit of recovery. As a general rule ther© is only one way to clear off indebtedness, and that is to set- by money money fo.r the purpose of reduction, and so make.one’s position secure, it did not appear so when land values were rising, and one could.'.add a further mortgage or sell without difficulty. But that South Sea bubble has burst, and we have to try to adjust our ideas to economic facts, and value land according to what the’ average farmer with an average herd, i n an average season, can make. If he can inake a reasonabe-.return, the indifferent farmer will) he able to live, and the man who works his farin to the best advantage will receive lire reward due t.o his .ndustrv and ability. POST OF GENERAL MANAGER Just prior to the end of the financial /ear, oiir general manager. Air Taylor, resigned to take up a position in Wellington. Mr Taylor vyas with us‘ for wilt years, and pretty strenuous years they• were. He .steered/ the norie-ttv through very idiffipplt times, his hank training standing him in good stead in many ways; lint at the same time it handicapped film in others. During clie first six years at least he made the. business his hobby as well as Ins job. •:nd this helped him to adapt himself to it. He*, always had an eye to the fhbiiire, and never failed to make provision to fulfil our financial pbliga r lions, and difficulties seemed to stimu:fite liis’ resourcefulness. Your directors are taking steps to fill the*'vacancy incl intend to make haste slowly in coming.' to a final decision. In the meantime Mr Nichol is carrying on.‘

THE TRIMBLE CASE. A matter of the utmost importance to the society, and- one that seriously affects evc-ry like society and limited liability company in the Dominion, lias been the case Trimble v. the Farmers’ Co-op. You will no doubt have read ■-he reports of the hearing of the case, and qf the recent decision. The. ver--iict was exactly as anticipated by our sgal advisers. The view taken by 111? learned judge regarding the action of Che board, arid his strictures on the general manager and directors who <ayg evidence, are qpite unwarfanted, though to be fail - to him it is only ight to state that it was not considered necessary to call any evidence except such as affected the legal points, though many witnesses-of good standing could save been called liaci it been thoughtnecessary. • I may state here that no novo over made by the hoard was with ■ yiew to lighting Messrs’ Jvcwtoii King, Ltd. Tlioiigh necessarily wp hayg been in active competition, and I am beaked to say we hr,ye always worked ;ii amicable- term's.

Aii ordinary jhniteu liability coin puny nay. go into business • wherever its. d.ieetors think they can make good proTts for their shagejipklers, who niay •fs : de at Tim.bu.ctoo ; but ,-a co-operative society concerned in the stock and •station business confines its main operations to the districts in which it/has shareholders, and it appears to me that he judge overlooked this. The Cjkato jeople urged the hoard - to enter!into business iii that district, and it would 3nelly have avoided doing so until the business had been consolidated ill other parts. However, shares had been taken up, and rather than see the. shareholders wait an indefinite; time without reasonable service, jtwasigreed that, provided a certain quota of shares was taken up, yards would hej built. The .slump hacj nothing to do with our decision to buy the half-share (in the existing yards- except in so far ,ns it made the offer to us possible, and ‘•.hat it enforced a delay in our,'taking definite action. 1 fee', quite safe in tating that the ‘majority ' fif thf people yho buy or sell at Okato yards .recognise that the action taken by the board was in the best interests of tiro .shareholders in that district, giving a better service by concentrating thfe buyers and so making better .competition for the stable to be sold, -and by keeping

an extra £IOOO liquid for financing sales instead of tying it up in-concrete and timtier. Bib’ical history - records twq instances in' which it would have been better far to have.broken promises than to have kept them. The first was that or a judge, who. from a mistaken sense of honour, rather than break his word, slew his own daughter; and the second was that of King Herod, who, heeaiise' be had not the moraj courage to break his word, beheaded a main lie ■vpuid rather liaye liepfc alive. The board’s promise, though trot, a foolish one, as in the eases mentioned, was given in the belief ‘ that a preferentin| alternative was not attainable, hut when later (events madgfetbe alternative possible, tiie board adopted the alternative. ■

'I he thanks of the hoard and shareholders are due to'the'staff for their excellent service to tlie -society diifing the year. The success or failure of the society depends to a very great extent on its staff, and J think the shareholders have every reason to be grateful lor thp loyal service given., i I now c 'fmclude by moving the adoption of tlig annual report", accounts, and bal-ance-sheet. " ■.; ■ ■ ■ , f , THE DISC LISSTON. The chairman moved the adoption of the report and balance-sheet, Mi- .T. E. Palmer seconding. ' Mr \y. A. TTewett said it looked ns if expenditure in the stock department shpuld he reduced, and lie suggested that the staff concerned with that branch of the business should be cut down, fie thought that a committee qf three commercial men . might he appointed to confer with the directors and thoroughly investigate stock, no- . counts and general financial position. Mr W. G. Belton said that Mr Tfewett not been quite fair. TTe had said Liiat, as a commercial man, looking at the balance-sheet, he would sav it was not as good ns it looked. Mr Hewett must realise that there were a lot of things which, the company was proud of

which were not shown in the balancesheet. Mr Belton said that the company had made up a lot of leeway as far -as gaining . the confidence of* tlie shareholders and tlie public was concerned. He considered that the company had turned the corner, and with the co-operation of the shareholders and other things being equal thev would' get; tlie business. ,

Due 1925-6 £6150 ' Due 1926-7 £3450' Due 1927-8 £3450 Due Ma-v 1928\ £1350