Seventh Annual Report and Balance-Sheet.

NZ Truth, Issue 889, 9 December 1922, Page 12

Seventh Annual Report and BalanceSheet.

The above company are managing to pay a 6 per cent, dividend, and- to carry this out they have had to dip into the carried-pver funds to the extent of £6. In other words, the management could only muster* up £5088 of profit on the thirteen months covered by the balance-sheet after writing off £4339 for depreciation. It took £5094 6s to pay. the dividend referred to. Th'e consequence of paying the dividend shows itself In the fact that for this "year the carry-over is £2057 2s as compared with £2063 4s 2d m hand on August 31, 1921. Plainly, then, is shown the fact that this "co-operative" concern has made no financial progress of any benefit to the company itself, let alone the shareholders. -On the other hand, the directors m their report are 1 able to point to the fact that the number of sheep and lambs killed for the period undur notice was 208,285 as against 191,170 for the season 1920-1921, so that we are entitled to assume that the company is not only gaining ground amongst the sheepfarmers but that its services In the matter of slaughterings are becoming stronger, even though the head of the New Zealand Meat Trust has its killing and refrigerating works next door to it, so to speak.* This writer does not know enough about the co-operative side of the business carried on by this company to enable him to give more than ■ . j A QUALIFIED EXPRESSION of his approval of its methods, but on the face of the accounts it seems to him that the competition of the North Canterbury producers has been fully justified, by the results of that competition so far. The balance-sheet to be submitted to the shareholders on November 22 confuses or groups facts m such a manner that neither "Cambist" nor the shareholders iri the company are able to arrive at the true position of the company. Take, for example, this line, namely, "Union Bank of Australia, Ltd., and sundry creditors, £80,710." Who could tell from this how much the company owes to the bank, or how much debt stands as owing to "sundry creditors?" It is, of course, folly to group these items under one heading. If the great Union Bank thinks fit to lend enormous sums td the company, why not tell the shareholders, m monetary terms, how much they are collectively indebted to that institution for? In the case of "sundry creditors," what possible harm could accrue from letting interested parties learn how the company stands m these respects? The vague position which arises from the grouping here <t . ' LEAVES ONE IN THE DARK as to the true position of these debts. From the figures given -it is impossible to say what the overdraft is, or how much is owing to other creditors. The paid-up capital of the company at date of the balarjca-sheet Is put down at £S-1,855. All that need be said about this matter is that the sooner the capital account is brought .up to the requirements of the business the better will be the business and services which the company will j be able to render to its shareholders and customers. For that reason the paid-up capital is Inadequate for prudent business purposes, the services or the company have always been reduced to a sum commensurate with the heavy load of debt it has .had td carry. It is bad enough when the market for frozen meat slumps, a& it has done lately, but there Is never any excuse for the heavy losses caused through the payment of interest on overdrafts or other forms of borrowing. The borrowing policy sticks like a tick to a bullock. There is- far too much of this kind of finance In New Zealand. Bettor call up the £56,580 liability, attaching to the . subscribed capital of tho company. This concern was formed" wiile the war was flt its height, and irrspite of the profiteering of. those times, the company has built up reserve funds amounting to £37,845. In this writer's opinion it ■ ■ i WOULD HAVE BEEN BETTER to have added /the reserves to the capita] account m the true co-oper-ative manner of loan capital. Of tho reserves mentioned, £5000 is for dividend equalisation, so it looks as if Investment was more dear to the h6art of the proprietors than plain co-opera-tion. There is a wide difference In tho two" policies. I On tho assets side, war bonds, £2125, seems as if tho face valuation was given, not the market valuation. In the latter ?ase It would bo necessary to write something off, a process which would, perhaps,, still further reduce the sum carried forward to the next year's accounts. Land and buildings, £103.005, and plant am! machinery, £31,043, added together, gives an Indication of what it costs to establish works of the nature used m this business. This fact should cause land speculators, land aggregators and honest farmers -to pause and consider the paid-up capital question carefully before embarking m the business of freezing. There should bo. as a minimum, enough money m hand to pay f o the works before a single brick Is laid or a sheep run constructed for the buildings. Stocks, stores and sundry debtors, £74,362, make a Jumble of differing Items for which no valid excuse can be offered. How much stocks, how much stores, or how much money owing by the sundry debtors it is impossible to determine i here. Why Is THE INFORMATION WITHHELD ! from the shareholders and the general public? The profit and loss account shows tho "freezing 1 , stox-age, felling, curing charges and sales and proceeds of by- ' products, £ 70,093," as the chief income, but it Is unfortunate that tho different items wore not shown sop-, arately. "Cambist" will, however, take ; tho fullest liberty with tho effects ot thl« kind- of accounting. On the other side of the profit and loss, "working expenses, maintenance and depreciation stand at £-15,4fi1." Salaries, afllre '■ and general expenses, £613G, appear to bo a heavy overhead ehargi? ami '. one that shouhl provide an indication ! that tho time has arrived for ecor.o- j rriicat contraction In this line' of expenditure. Interest, insurance, income tax, rent and advertising, £10,---327. proves how costly the process of running a business on overdraft is. | Adding these Items together the total 1h £G-1,915, showing a tremendous cost when compared with the Income of £70.593. Seeing that the sheep nnd Inmbs killed for the season totalled ! 205.250. nnc> working out the per capita j figures from each grour of expenses, ! we find that it took 4s 7<l per head j for vorklng maintenance and ('depreciation, the salaries and off.cc expanses took over Id per head, while interest. | M.F.ssey'a tnxoH, etc.. ran into over 11 %i\ per head of every mutton

handled m these works. Adding up these theoretical costs, THE FACT COMES OUT S that the total outgoings amounted to 6s-1.%d per head. How much more is hidden away m the valuations made on the inventory and which the auditors have no responsibility for this | candid writer will not attempt to guess at. From the time when the sheep and lambs leave their fattening paddocks until they pass through the 1 works and then into the Brit^h Meat Trust, the muttons are skinned or shorn of every bit of value, which is the lawful "profit" of commercial sharks, shipping lings and other exploiters. When will our producers get serious about these important matters? The first sign of awakened sense will be when -they put up their own capital for running- their own works and finish off the job by selling, themselves, their produce m the best markets of the world. The commercial blow- files must be driven from the prime Canterbury lamb and mutton.