ROBERT CAMPBELL AND SONS.

Otago Daily Times, Issue 11397, 14 April 1899, Page 3

ROBERT CAMPBELL AND SONS.

ERROR IN THE ACCOUNTS.

THE CHAIRMAN'S EXPLANATION.

(Fkom Our Own Correspondent.)

LONDON, March 3.

A very large number of shareholders in Messrs Robert Campbell and Sons gathered on Monday afternoon lust, at Winchester House, E.C., the occasion being the seventeenth, annual ,meeting of the company. Mr W. H. Campbell (the chairman of the company) was present, but, as he had just risen from a bed of sickness, Mr George Harris presided.

' The report and statement of accounts I have already sent you. The Chairman, in moving the adoption of the report, said : —

With regard to the profit and loss account, if any of you have taken the trouble to compare these figures with the previous year, you will find that the total expenditure in New Zealand, £29,036 11s,,which includes all expenses of management and the working of five large sheep stations, together with rents, rates, taxes, etc., is tlii-i year less by £596, and that the expenditure in London, -which includes the three items, £1173 7s 3d, £20, and £52 10s;—total, £1245 17s 3d—is less by £218 than in the preceding year. There is also a reduction of about .£6l in interest on debentures accounted for ■by our having paid off about £6000 of the bonds before maturity. On the credit'side the profit on live stock is less by £7487. This is not altogether to be regretted, for. the reason that it has been caused chiefly by our having weeded out and sold a large number of old sheep last year, by which process it is hoped that the stock, added to as it has been by some very good lambs, has .become greatly improved in quality, which should increase our profits in future years by giving us a better and a larger clip of wool. Unfortunately last year when those sheep were sold the,, weather, was very, .dry, and owing to the failure of root crops there was little food for the animals, ■ and the prices realised were consequently very low.;, The number oi sheep, I .regret to say, was materially decreased by a severe mortality amongst, we hope, the; weaker stock, and also by a falling off in the lambing. Our shipments- of wool were 2825 bales of greasy and 607 bales of scoured —total, 3432 bales—against.29oo: greasy and .446 scoured, giving in 1897. a total of 3346, making a difference of 86 bales in favour of 1898; but reducing the whole to the basis of greasy wool, the difference would be more inearly, represented by 250 bales. With regard.to the sale of rabbitskins, our accountants >; in the ' colony; did' not keep separate accounts, for the expenses with skins last year,' so we have only been able to show the net amount of rabbit expenses, £2062 8s 2d, after deducting the receipts for. skins, which latter were, about £430. We are gratified to hear from the managers that the rabbits on our runs have been very much reduced in. numbers. We think this reduction will be continuous, as frozen rabbits from New Zealand .are becoming a large item of imports into this country, and, instead of their being poisoned on the ground as hitherto at a' considerable expense to ourselves men are employed to trap them and sell-them to the freezing works, and as these men are paid by the numbers, they are energetic in their efforts. The | amount at credit of profit and loss account for the year is £5041 14s Bd, as against £8845 10s in the preceding year. This diminution of profits is caused entirely by the reductions in the sheep account, which I have already alluded to. Turning to the balance sheet, on the debtor side our capital stands at £180,000, debentures at £83,800—a reduction of £6200— caused by payments made by the company in anticipation of due date. / Sundry creditors are fully set forth. : On the credit side, our freehold land and buildings stand at a figure much the same as last year, and this the board consider a safe valuation. There is a diminution in the number and value of the stock, 'the latter by £2666, owing to the causes which I have already explained, and which we think are temporary. . The board have adopted as a permanent valuation for the sheep the low price of 7s per head. Sundry debtors are some £612 less, and' the New Zealand working . account, £8800, is represented by the drafts drawn on and accepted by the London office between the Ist July and 31st December, which will in due course come into profit and loss in next year's accounts.

I now come to the unfortunate item. " New Zealand working account in suspense," £2277 5s 2d. I have already told you that the auditors have, since the formation, of the company and up to last year, also been our accountants. The bookkeeping has hitherto been entirely in their hands, and they have made, all the entries. When .we reduced our capital, by permission of the court, in 1897, the board determined that every item in the accounts should be written down to its actual value as .far as that could be ascertained, and that everything not represented by a good asset should be written off alto"ether. In order to do this inquiries were made of the accountants with respect to various balances, and especially that of the New Zealand working account ; and they gave their assurance that the figure was correct, and contained only the sums advanced for the working expenses in New Zealand for the half-year, which is not included in the profit and loss account. This year, however, when the secretary got the control of the books into his own hands, he was unable to agree with the balance of that account by about £2000 • arid the board consequently asked the auditors to explain the discrepancy. To do this they had to trace back the items for several years, and as this operation took them some time, we did not receive the explanatory statement from them until, as I have already said, the 13th inst. I have the statement here, but do not know if you. wish me to go through all1 the items ; I will, however, take the. three principal ones. In June. 1839, credit was taken for £225 5s 4d. being an amount receivable in New Zealand as compensation for freightage given up, and when the. cash was received in the following half-year it was credited again to cattle account, being thus brought in twice to profit and loss. The next item is £500 brought in in June, 1890, in anticipation of rabbitskins then on hand and to be shortly realised ; and the third important' item 'is £1307 14s 2d, credited at the same date, in anticipation of cropping rents, also to be received in the following half-year. These three items total £2062 19s od. These amounts the board were justified in taking credit for at the time, as they were then represented by realisable assets; but, of course, they should have been written back as tho amounts were collected. This was not done, and consequently they .have been standing ill the accounts for some years unrepresented by an'- assets. That, gentlemen, is the history of these denlorable mistakes. They do not renvemnt an-- actual money loss to the shareholders ; the result only is that the nrofits have been anticipated by this sum of £2277 5s 2d : and I think you will agree with the directors that, nnmediately upon their becoming c£" 'i -nut

of the details, it was .their duty to bring the matter to your notice, and to recommend that the amount shall be written oil! the profit and loss account for this year. In regard to the profit and loss account for tho year, tho amount at credit is £5051 14s Bd, which, added to the balance of £1345 10s brought forward after paying the' dividend last year, would have given £6397 4s 8d available for dividend, if it. wero not necessary to make provision for the error of £2277 5s 2d. Writing this off, however, the divisible profits are reduced to £4119 19s 6d, out of which tlm directors recommend the payment of a dividend at the rate of Is 3d per share, free of tax, which will absorb £3750, leaving a balance of £369 19s 6d to be carried forward.

I would like to add a few remarks regarding our debentures. The amount outstanding last year was £90,000, bearing 5 per cent, per .annum. These all fell due for payment on the Ist January, last, and the board, feeling that tho security behind them was very ample, considered they should be replaced at a lower rate of interest. We therefore offered the existing holders the opportunity of renewing them for a further, period of five or 10 years at 4£ per cent, per annum. Debentures for upwards of £10,000 have been renewed and reissued a^ that rate, £6000 have been paid off before due date from cash in hand, and to pay off the remainder we have taken a temporary loan from our bankers, and as new applications come in that loay is being from time to time reduced. Taking into account the exceptional security offered, embracing as it does 70,000 acres of some of tho best freehold land in New Zealand, to say nothing of the live stock, which alone would realise, we believe, under forced sale, an amount equal to the entire debenture debt, I think we have a security to offer to investors as good as any in the market. With regard to. the prospects for next year, I will make no prophecy, but I am glad to . say' that with one exception our advices from New Zealand are favourable. There is abundance of feed, and the sheep recently sold have realised much better prices. * We shall have at least £1000 from cropping ; rents to receive this year, and a recent telegram informs us that the lambing has been above the average. We have just.heard that, unfortunately, a flock of sheep at Benmore, which had just, been shorn, were caught in a blizzard, and some 2000 or 3000 were lost, in spite of all the efforts of the shepherds and Shearers to save them. . The wool market has every appearance of maintaining its recent rise, and the clip should exceed last year's in quantity. I do not know that there is anything else that I can say at present, but I should be happy to answer any questions afterwards. I now beg to move:

" That the directors' report and statement of accounts to 31st December last now presented be received and adopted, and that the amount of £2277, balance of the New Zealand working account in suspense, be written off to the debit of profit and loss account."

The motion was seconded by Mr W. H. Campbell.

Colonel Cautley wanted to know if there had been any alterations in the leaseholds.

The Chairman said there was a portion of land—consisting of 3000 acres—the lease of which they formerly had, but which had to be given up. At a very favourable rate they had now acquired a new lease of it. With that exception the leases remained as they were.

The motion being put and carried unanimously, . a dividend at the rate of Is 3d per share, free of income tax, upon all shares of the company was declared, payable on March 1.

The retiring directors —Messrs W. H. Campbell and A. K. Wylie—were reelected. •Mr Mudie proposed, and Mr Tyser seconded the motion —"That Messrs Herman, Lescher, Stephens and Co., of 6, Clement's Lane 7be elected auditors of the company for the current year at a remuneration of 30gs." This was unanimously agreed to. A vote of thanks to "the managers in New Zealand for their conduct of the company's business during the past year, was proposed by Mr Van Raalte, who said that these gentlemen were doing everything they could to.bring the company to a successful issue, and lie had not the slightest doubt that they,,:,would do so. .■ Wool was improving iir -price, and, so far as lie could see, they would do very well in the future. They 'had'-very good management now; he. did not mean to say they had not that before, but Mr Campbell, jun., who was riow in New Zealand, was very energetic indeed. At all events the company's prospects were improving, and it was only right to acknowledge what had been done. —(Hear, hear.)

The motion was seconded by Mr Mudie, and unanimously adopted. The meeting, was1 brought to a close by a vote of thanks being proposed to the chairman. . ' . ,