WANGANUI WOOLEN MILLES, LTD.

NZ Truth, Issue 936, 3 November 1923, Page 13

WANGANUI WOOLEN MILLES, LTD.

Third Annual Report cV Balance Sheet

Three years have been frittered away and yet this corporation has nothing more to point to than a balance sheet made i*p of £24i771 on fixed deposit with its bankers, £3000 sunk m freehold property at Aramoho, a small lot of machinery and plant, £647, preliminary expenses and brokerage £9576 and establishment expenses amounting to £1497.. "Cambist," at the time that the prospectus was issued, gave the promoters a great boost and to this and this alone the company owes the fact that a most successful flotation followed. This writer has consistently for many years held the opinion that woollen manufacturing . is\ a natural secondary industry suitable for the Dominion. But when he welcomed the Wanganui company as a step forward m this economic advance he. never thought that it was possible for so much childish nonsense to be perpetrated by its direction as the course of its business has bo far revealed. First, there was the attempt of a blessed tailor to get the control and management into his handß at a big salary. That, luckily, was squelched by some caustic comments by "Cambist," Then- followed the ridiculous dflay m. obtaining machinery and plant. We are asked to believe that this dejay has saved the company £30,000. There is

NOT ONE ATOM OP PROOF offered In support of that . statement, and fpr that reason .'JCambiißt'? mumbleWratiß." Htm ';to«* is trouble; a vicious-looking circular issued by one C. B. Collins, a member 'of the costs brigade, to the shareholders, urging them to take a course of action "to obtain from Messrs Silk ' and Haworth a refund of any commission received by them m excess of the amount they are lawfully entitled to." Whether there is any "excess" to, recover or not "Cambist" cares nothing, but the fact is made, plain m the balance sheet that the expenses under . this- heading mopped up £9676 of the shareholders' money! It is certainly remarkable that nothing httf appeared m the way of explanation either from the present directors of the company or from Juqky sharebrokers who have had a dip into the brokerages m question. There Is too much law involved In this matter for "Cambist" to advise bis numerous readers (shareholders tn the company m particular) what ,they ought to do about this matter, so he asks the directors and those of them who stood as promoters m the formation of the concern to simply advise the shareholders as to the true posi-* tion of the matter. It is strange, if It be true, that, say, £2000 of brokerage has been disbursed which is not i m strict accordance with the agree- ! ment made with the brokers. The thing seems so grotesque to this writer that he would prefer to believe such a thing to be impossible. However, the shareholders are entitled to a very full and informative ANSWER TO THE CHARGES made by C. B. Collins. "Cambist" would like to< ask the direction whether the parties who have signed the balance sheet as joint secretaries are the same parties who drew the bulk of the I brokerage commissions? If that be 'the case, how is it considered "good business" to employ such parties m such a flduoiary position to a concern with a preliminary expense account of such big tonnage "as £9676? No wonder, with such things happening, "Cambist" has received so many letters from shareholders indicating lack of confidence m the concern. He has been asked on many occasions if the share liability could be avoided by refusing to pay calls. There are many investors who would quit their Interests if only forfeiture would do It for them. To these disgruntled parties his reply is that they cannot forfeit their shares and that they are liable for all calls that may be made upon them up to the limit of their shareholding. . ■ . ' ! It has been stated that very few of the shareholders m this young company are sheep farmers or wool growers; that most of the money invested 'has come from the towns, and not from i the country districts. If this be true, then "Cambist" would advise the shareholders to have their Board of Directors well combed out and a proper representation of the inveatdrs made thereon. This writer has a certain amount of rqspeot for farmer directors provided that they are engaged with something within the scope of their experience, otherwise it is rather risky to allow "them to attempt matters ( of which THEY ARB TOTALLY IGNORANT. The question is whether any member of this board has the necessary praotical experience for guiding the initial | steps of the company or for leadership i m its future policies. The only per- j sons who can settle these points are j the shareholders themselves, and to them entirely the responsibility of a sound decision depends. The start made by this concern seems to pave tangled everything m the ribbon barriers. One wonders If the field will ever reach the winning post. At any rate there 1b time to get some proved business brains at work and the sooner there is an attempt made to secure the necessary headpiece the better for all concerned. This move Is on important matter for the sake of the money to bo invested. Country bumpkins have proved themselves foolish on every board that they have been pushed on to. Look at the meat companies and the wonderful Meat Producers' Board; also many dairy concerns. "Cambist" adjures city investors m this little affair to see that they are not landed into the financial pig Btyes, sheep dips, or dehorning pens which have proved the undoing of country folk who trusted smart spouters to "look after; them." Get down to sound business methods, strlot honesty and efficiency, and, above all, let the Investors learn the true position of the company; also who it is that runs the Show. _. !

been lost, by these omissions and a valuable experience has been smothered up m the darkness of" this report Here was an opportunity to demonstrate whether the local sale's to speculating local buyers were 1 ? beneficial to the company or the reverse. < That question answered on the* basis of the cash received from the speculating jobbers would clearly prove the effects of consigning to the London market, through the hands of an established middleman iij the trade. "Cambist" has always favored consignment. He is m the habit of viewing with misgivings the dealings of outright buyers of dairy products, for it seems to him that the latter class are simply gambling on the London market, but m such a manner that the producers have to provide a margin of risk m the lower prices paid to them for their goods. Of course, this is "good business" for the local buyers, but hardly so for the sellers. Consignments carry :

s ALL BISKS AND PROFITS for the producers. In this writer's experience nine times out ■of ten the market movements and cash returns are better under this policy and he is not alone In that opinion, The output of cheese is only about 101 tons for the season covered by the balance-sheet This Is one of our small factories. For that reason the questions raised here should not be shirked by the management. Another omission is the notification of the grading of the company** output. Why .not let the suppliers learn the practical test which this marks upon their manager f If the manager has a good record through the grading of the cheese it is but fair that it should be endorsed In the report. So much depends upon quality nowadays that grade marking has become the hall-mark of efficient manufactureing. There seems to be no reason for complaint regarding the ratio of cheese per Jb of tyitter fat. The figures supplied m the report are close to the average of cheese production. '

The balance-sheet shows a paid-up capital of only £946. This is closft to the values set. down for land,, buildings, plant and water supply, which items total £998 after, writing off £85 for depreciation of those assets. It is Clear, however, that the capital account is not sufficient to provide working funds, for the sum of £211 has had to be debited to the working account In respect to interest and Insurance. This means that working capital had to be supplied by the Bank of New South Wales. On the output (101 tons) a charge of over £21 per ton of cheese manufactured is the result of such fatuous finance. It is time that dairy farmers quit leaning on others to help them to carry on. There should be more cp - operative independence amongst them, which is another way of telling them to provide their own working capital. After 28 years' practical experience this sample financial leeson should have been learned by the Dai.nevirke Co-operative Dairy, Co. Ltd.