THE FARMERS' "UNION TRADING COMPANY (AUCKLAND), LTD.

NZ Truth, Issue 817, 9 July 1921, Page 4

THE FARMERS' "UNION TRADING COMPANY (AUCKLAND), LTD.

Fifth Annual Report and BalanceSheet.

In ' looking at the above balancesheet, "Cambist" feels that he sees a further remarkable advancement m the company's affairs, and that when the following balance-sheet is issued twelve months hence, the force of this remark, will be made clear. . The fact that strikes .him is the wonderful organising powers of the management. The capital account has grown, the assets have reached to- a total of £1,378,676. Of course, between these two matters many other things have taken shape and must, later on, have a part to play m the natural evolution of so great, and so young, an institution: To be quite frank, about this balance-sheet, all of its figures are so huge,, that it can only be considered with feelings of . gravity. But this does not imply that "Cambist" has any doubt about the solidness of the company, or that he holds misgivings about its future. What really moves him is the thought, How does it strike the vast body of shareholders linked up with its fortunes? Do the 16,000 persons m this great proprietory REALISE THE RESPONSIBILITIES that rest upon them as co-operatoVs? "Cambist" has m the past urged these people to co-operate, and he tells them now that the need to co-operate is greater than ever before. An insidious attempt is- being made to hamper the- development of institutions f such a& this, for they have hit old-time vested interests m business hardly. If the prudent members, whose names are entered upon " .the shareholding register of this company, .pull together and contribute every line of business that they have need to transact to this, their own, company,, a very tich harvest of rewards awaits them. The time for the issue of all of the authorised capital has arrived, and we are glad to notice a strong movement m this direction is already m progress. , The paid-up capital has increased by £ 87,746, to £411,343; while the sub- [ scribed capital has mounted from £424.620, to £5G8,460. In the latter case the increase means that £143,840 is the potential addition to the trading funds and. to the company's credit. That the credit of the company Is first-class can be deduced from the fact that the bank has lent it £79,850, that depositors have loaned it £331,---214, that the amount outstanding on current accounts is £151,482. . These items are purely credit matters and, to gain the use of such large funds, the company must satisfy the lenders of these moneys that the numerous parties behind these loans feel assured that they are. safe m doing so. In the case of mortgages totalling £160,597, the position is different, for these mortgages depend upon the pledging of immovable assets such as land and the buildings thereon. In these cases the mortgagees can assure themselves by valuations, and so there is no need for them to, worry about the position m which -.they, have voluntarily placed their money or values. ißills payable and sundry creditors are each £68,516, and £64,767- respectively. These items are trade accounts, and are' so small that they prove that the company is trading upon a cash basis, and so assuring the solidity of the stock accounts. Balances at bran 7 ches, £35,730, is a small, matter m connection with the company's internal affairs, and its proportion to the. trade done at these branches, is indeed a trifle. • Turning to the assets side of the balance-sheet, there are two 'items which should disappear as soon as possible, one is notation expenses, £5550. and the other '-'goodwill." £151.---000. It is a pity that the former item was not CHARGED UP TO THE GENERAL EXPENSES, ; for it has to do with the issue of the new capital and only means that,' to get this m, it cost the amount stated. As to the goodwill entry, that comes from the purchase of businesses which must m the aggregate bear some very good relation to the present value of

the businesses taken over by the company. However, it is. only a paper asset, and it must be written off m the near future. As to the other assets, they appear to be within the proper proportions of this great business. The property accounts run into big figures, but what can one expect with so many branches? Ownership of land and buildings is better than paying rent to landlords. These investments, if carefully made, will m the future reduce overhead charges considerably and, at the same time, make openings for various forms of financial arrangements, which will conduce to the use of money sunk m ■■ these properties. The stocks held appear to be of huge amounts, £432,477 m Auckland and £176,487 at the thirty-one branches now m operation. Considering that the turnover had grown from £985,000 to £1,484,513 during the year, puts a different complexion upon the matterNo stock, no trade, is a trite way of summing up the position.

The gross profits of the business show £218,686, but the net profits are only £20;719 for the year. The present conditions of trade are unique, but there is a bright time ahead m the near future. The first mentioned sum indicates what can be done m a souncHy-conducted business.. It is, however, but the beginning o£ cooperative trading, after all is said and done.