COMPANY BALANCE SHEETS.

Otago Daily Times, Issue 18686, 16 October 1922, Page 4

COMPANY BALANCE SHEETS.

SOUTHLAND FARMERS* 00-OPERATIVE ASSOCIATION, LIMITED. Dividend. §•_. -5 1 i? | « •oS I 2 .3 s -P, A -g >0 <3 Jj £ 94S o 'a o (5 oa July 31. a £ t p.c. ’ a. Profit—hud ... 37,nee 39,20 s 10,119 s $ Profit—--1920 ... 50,765 154,735 14,351) 7J 6 Profit—--1921 ... 61,769 157,694 1,901 —r- . 4136 Loss—--1922 ...64,149 161,844 37,667 *37,667 * Debit. When the annual meeting of the Southland Farmers’ Co-operative Association, Ltd., was held at Invercargill on the 7th inst., the chairman’s unpleasant duty was to lay bare a statement of facts that <nust have sounded to many like the death knoll of the association. Apparently the worst was not known whjn the accounts were printed, and before shareholders had fully realised what a loss of £37,567 on the year's trading signified, another and harder blow followed by the announcement that provision would require to be made for a further £53,000, or £90,000, approximately, in all. Yet perhaps the most remarkable admission was that the association, which two years ago showed a profit for the 12 months of £14,359 by its published accounts would pretty certainly have shown no, profits had strict inspection and assessment of accounts then been made. On that occasion the directors congratulated shareholders on the satisfactory result of the year’s business. Here is something for the general public to ponder over.

Taking the accounts as published, of a total subscribed capital of £93,276, there had been called up at July 81 last £65,878, which was in arrears to the extent of £1729. The amount available in respect of the uncalled portion may be taken in the present stringent times as mainly an unrcalisable asset. The liability under deposits has been slightly deorcosed, sundry creditors have considerably decreased, while the bank overdraft has been reduced within the past 12 months. At July 31, 1921, there appeared in the balance sheet, reserve fund £1477, and profit and loss appropriation account £4310. How these two items have been disposed of is not apparent, but they do not reappear in the 'statement of accounts issued i2 months later. It would bo interesting to learn what their fate has been. Have they been applied in partly moating income tex reserve? The auditors state in their report that ne depj.ociac.ion has been written off buildings. Consequently anything entered under that heading must have been applied to plant, motor cars, etc. Stocks have been reduced by one-third value from last year. The main asset is sundry debtors on open and current accounts, £23,720. How far these are secured is not stated, but it is a natural assumption, upon reference to the auditors’ report, that the extra loss of £53,000 mentioned by .the chairman is principally, if not entirely, connected with these. When this additional loss was brought to light, would it not have been the best plan for all concerned to issue a fresh statement of accounts with the figures readjusted? The practice followed by this association of entering all charges in one sum in the profit and loss account does not commend itself to us. Shareholders are surely, entitled to detailed information on this point. The association for some years was handicapped by a legacy of accumulated losses from previous years. This was finally extinguished after July 31, 1920, but in the light of later information tho last instalment at any rate must have' been written off out of capital. Without reserves, an abnormal situation thereafter had to be faced, and as'it was associated, as tho ehoreholders were told, with bad management, the position is now realised to be desperate. The step has been taken to formulate a scheme of reconstruction, and it lies with, the depositors to, determine the future policy of the concern. If they decide to convert their deposit money into share capital and the shareholders forgo their shares, the situation, with improving farming prospects, may be met. Possibly the answer will depend on the proportional number of depositors who are also -shareholders.