COMPANY PROGRESS.

Otago Witness, Issue 3889, 25 September 1928, Page 32

COMPANY PROGRESS.

THE NORTH OTAGO FARMERS’ COOPERATIVE ASSOCIATION, LTD.

After a lapse of five years, it must be gratifying to shareholders to see the company resume the payment of a dividend, but the question arises whether the directors, in their natural desire to provide shareholders with a return on their holdings, have not moved somewhat hastily. A net profit of £2133 for the past year, while indicating an improvement, is not sufficient to meet the 5 per cent, distribution that has been decided upon, and, with income tax to be allowed for. leaves a small margin of undivided surplus to be carried forward to the current season. The dividend may thus be said to relate to a longer period than 12 months, and, in view of the fluctuations in the net returns of the past few years, it might have been considered to be more prudent meanwhile to retain all surpluses in the business, especially when it is the year lately entered upon that is expected to “ mark the beginning of a return to general prosperity.” The gross profit has increased to £lB,oB6—a rise that is accompanied by a corresponding movement in expenditure. The relation of the two sides is practically as it was, although, with larger figures, there is a larger margin. With the exception of depreciation on plant and fittings, the disbursements are grouped, but, with income tax still to be included, the exact position is not ascertainable. The nature of the different items is fully detailed. Since 1919, expenditure has stood to gross profit as under, viz.:—

The assurance that practically the whole of the doubtful debts have been eliminated will be welcomed, especially when it is due to a large extent to realisation. The fall in the chief asset from £56,272 to £48,466 from that cause will considerably strengthen the position, and, with provision made against possible future losses, the business should be able to proceed on its way unfettered by any legacy of bad accounts from the past. A reflection of the realisation may be seen in the substantial bank balance of £12,436, of which £5OOO is producing interest. The payment of the 5 per cent, dividend will not involve any borrowing from the bank, Whether the further reduction of stock in its various forms to £36,508 is due to diminished quantity or to more rigid valuation or to both reasons, it stands favourably in relation to the gross profit, thus giving a further indication of the improved position. Properties, freehold and leasehold, stand at £29,062. No mention is made of depreciation on buildings, this being in view, possibly, of extensive alterations that are in progress. The sum of £659 has been written off plant and fittings, or approximately 13 per cent, over all. On account of the different nature or those assets, from the fast-depreciating motor vehicle to office furniture, the respective values of which are not stated, the allowance seems a generous one. Customers’ credit balances, at £9076, and trade and sundry creditors, including bills payable, at £2729, do not seem unduly large. The outstanding liability is deposits, amounting to £64,719. As Some of the deposits are at call, it may be expected that advantage will be takeii of the balance in bank to pay off a portion. It is to deposits that the association is indebted for its means of running the business, the paid-up capital, as it stands at present, being inadequate - for the purpose. It is not stated what thd cost of the deposits is, but their annual interest bill is likely to exceed the amount proposed to be distributed in dividend; Doubtless the depositors are, to a largd extent, shareholders.

July Paid-up General Net Liv. 31 Capital. Reserves. Profit. p.c. 1920 ... £37,500 £29,948 £13,728 8J 1921 37,500 18,147 43,358 7 1922 ... 50,085 8,863 19,28-1 5 1923 50.270 5,439 11.344 5 1924 50,310 1.669 241 1925 50.860 307 33 - 1926 50,860 1.671 3,364 1927 50.86'1 1.375 1,954 1928 50,860 *966 2,133 5 * Subject to ncome tax. t Loss.

Expenditure. Gross Profit. Patio. 1919-20 ... £19/302 £32,730 p.c. 58.06 1920-21 20,354 16,996 119.76 1921 22 17,922 8.638 207.48 1922-23 16,452 15,107 108.90 1923-24 15,700 16,791 93.50 1924-25 18,571 18,610 99.79 1925-26 15.284 18,648 81.96 1926-27 14,747 16,701 88.30 1927-28 15,953 18.086 88.21