NEW ZEALAND FARMERS' FERTILIZER CO., LTD.

NZ Truth, Issue 868, 15 July 1922, Page 3

NEW ZEALAND FARMERS' FERTILIZER CO., LTD.

Annual Report and Balance- Sheet.

On looking over the present balancesheet of the above company a weary feeling spreads itself over the mental outfit of the farmers', friend, to wit, "Cambist." The period covered by the accounts gave the company a full year of working, production and selling. To find that these operations have resulted m a loss of £15,916 is, indeed, a great disappointment. The worthy chairman, m his report to the shareholders, has utterly failed to explain, as he should have, done, the real causes of this disastrous trading experience. He goes so far as to state "that the result could hardly have been otherwise." Since this has been given to the shareholders, why has the company failed to let them know just exactly "where the shoe^ pinched"? The loss of £15,916 on a full-time run of the works is

A VERY GRAVE REFLECTION

on the management of the concern. There are three places m which this buge loss could be made, namely, on' the technical side, the selling side, or the general management. What shareholders will wish -to learn is the detailed responsibility which attaches to all of these departments.. Has the company secured real, efficient services m the manufacturing department? Does the commercial end of the business prove itself to be worthy of the great cost of running it? In other words, is the company efficiently managed throughout? In the previous balance-sheet the company made a loss of £18,310, all of which has been added to the cost of "building, plant, and machinery, as it actually formed part of the cost of construction." The quotation is from the directors' report. ".Cambist" will venture to remark that the manner m which this has been carried through does not meet with his approval. Turning to the balancesheet, one finds a most objectionable form of accounting has been followed. "Land, buildings, machinery, plant, etc.," are all lumped together, and the valuation made to appear as £309,810. "Cambist" insists that such a method is unworthy of the confidence reposed by. the shareholders m the management, and that had he been present at the general meeting he would have done his best to get the balance-sheet rejected. He would have insisted that a new document be drawn up setting forth these assets m ,detail. In the latter case he would have forced the directors to show the original cost of the land, the buildings, the machinery, the plant, and the "etc:" To these items would be apportioned all of the several writings up, showing m every case how the inflation occurred. Some of the £18,310 lost to end of March, 1921, may require to be put down to other things besides the cost of construction. It must not be forgotten that this company was running a sawmill and playing with the merchandising of imported fertilizers at one time m its short career. Under such circumstances, to smother all of the losses m the lumped items of "land, buildings, machinery, plant, etc.," appears to "Cambist" as a bit of company "cheek" that merits a smart

"SLAP IN THE FACE." This is supposed to be a farmers' cooperative enterprise. If it be really such, why not follow co-operative methods m accounting? If the concern is to be run m the best interests of its farmer ownership then, by all means, let it have the decency to furnish its shareholders with an honest set- cut of the assets and liabilities of the business. Lumping a lot of differing'items under one 'heading is not a candid manner of accounting. It may be a splendid way of hiding, errors m the management; it may be a splendid manner of hiding gorgeous profits, but, all the same, it prevents sound criticism and it obscures sound conclusions, which ought to be the pride of any moderately- con ducted- business to help the proprietors to arrive at. Farmers are suffering from the "swelled head" which 'unearned profits are prone- to induce- The business ethics, methods and ideas of farmers greatly need to be purified. They should be made to face the realities of honest endeavor. The responsibilities 'of incorporated association should ibe made to press upon each individual member to the fullest extent. Others, besides "the man on the land," are interested m most of the farmer companies which 'have sprung into existence during recent times. For this reason particularly, though there are many other sound ones, farmer' concerns deserve the closest investigation. The banks which lend the peoples' money to farmer concerns introduce a creditor element, which, m not a few instances, 'has proved to be nothing better than a lock-up of good money, which could haye been better made use of m other channels. Up to the present the New Zealand Farmers' Fertilizer Co., Ltd., ■has failed to make good ; it has spent a vast amount of money of its own and of its bankers. So far no one seems to have derived any benefit from all this expenditure. The whole thing looks like a financial jazz— 'bewildering and incongruous, and the history of the matter can be summed up m the one word, "unprofitable." Turning to the balance-sheet, one finds that the paid-up capital is £261,---942, that only £3085 stands for the uncalled capital; that "calls m arrears" amount to the enormous sum of £24,---852. The latter figure throws out a ■hint that over ten per cent, of the holders o£ the shares are either, monetary shirkers, or, m all charity, a very hard up mob of proprietors. In view of the company's age such a/record is unworthy. The ' law should /be set m motion to compel these "calls m arrears" to be paid up and clear the capital account of such financial vanity. It is cases like this which provide material for the jibes levelled at agricultural banks, co-operative associations for trade, and many other purposes. Until the farmers can prove by their capital accounts m joint stock enterprises that they aTe aible to stand up to and perform an ordinary financial obligation, it is useless for them to howl out for any of these essential matters. Sundry creditors £4894 is presumably all that is owing at date of the balance-sheet to outside creditors, with the exception of the Bank of New Zealand. £ 125,381 is the huge overdraft granted by that liberal institution. To prove how

EXTRAORDINARILY LIBERAL,

this advance is one has only to consider that the total of liquid assets available at end. of March last was £31,481, made up of stock, £19,967, and sundry debtors, £11,514. On the face of such figures where is the bank to collect its debt from?

There is very little left for comment on the assets side of the balance-sheet, for the properties account, stock, and debtors have already been noticed. Rights and concessions . £20,000 looks like an old-fashioned ornament which may bo worth all it is put down at or may not be worth a -penny at the present moment. What is it anyway? A plaster cast of a dairy cow, or a model of a white horse? Moving on ito "preliminary- expenses and brokerage, £ 14,318," and "balance profit and loss account, £15,916," we get a total of £30,234. This will have to be written off, either from profits, if ever this concern reaches to that happy state, or from the paid-up capitdl of the company. To sum it up-r-£ 30,234 of dead loss.

' The profit and loss account is worthless from eyery point of view. There are no details, but it i cost £40,6G9 to earn (?) £23,676. The sooner this concern is made "give an account of its stewardship," the better for its proprietors. Regarding the bank over-

draft, which must be costing the company about £9000 per annum the auditors say it "is covered by the issue of mortgage debentures and the joint and several personal guarantees of some of the directors-" But what is keeping the show from earning a profit?