COMPANY PROGRESS

Otago Witness, Issue 3994, 30 September 1930, Page 9

COMPANY PROGRESS

ffHE NEW ZEALAND FARMERS’ COOPERATIVE ASSOCIATION OF CANTERBURY, LTD.

* On first preference shares only, t Debit balance. The effect of the prevailing financial depression is shown by. the net profit for the past year coming out at £19,133. as against £50,109 for 1928-29. As the director's’ report points out, the gross profit is reduced by the lower prices for wool and Jive stock, while the extra provision considered necessary with reference to advances has had a further effect in diminishing the net profit. An allocation has been made not only of the net surplus lor the past year, but also of the practically equivalent amount brought forward from the prior season. For the fourth successive year, the holders of first preference shares receive a distribution, which altogether covers a period of five years, while the “A ” preference shareholders after being paid two and a-half years’ dividend in the past two years are again relegated to the nodividend section. When the sums of £20,000 and £5OOO are transferred to special reserve and alterations and plant reserve respectively, a balance of £4164 is left to be carried forward to the current season. As far as the net surplus ’ pf 1929-30 is concerned, rather more than half is retained in the business after paying the year’s dividend on the first preference shares. The fall in the gross profit to £190,744 is accompanied by a rise in general expenditure to £147,412. This rise is slight, but expenses are now equivalent to 0.28 per cent, of the gross profit, while for 1928-29 they were 70.91 per cent. The allowance for depreciation, bad debts and reserves for doubtful accounts has been fixed at £23,340. or nearly treble that of the previous year. The increase may be chiefly, if not entirely, ascribed to the larger amount provided against doubtful accounts, illustrating the stress laid by the management on the changed circumstances caused by reduced prices. Freehold and leasehold property stand at the net figure of £388,874, or nearly £5OOO less than at July. 1929. A certain allowance has been made for depreciation, but it does not appear how far this property is affected by it. As distinction is not drawn between the freehold and leasehold sections, their respective proportions are not seen, but the adequacy of the provision will be determined to a large extent by the conditions pertaining * to the leasehold property. Further fixed assets are contained under cost of alterations (£24,815) and warehouse fixtures,' furniture, machinery and plant (£59.690) As, 12 months ago. £5OOO was set aside against these two items and the further instalment of £5OOO allotted to them at this time will bring their combined value down to £74,505. the allowance for their depreciation may be regarded as generous. •

Advances of £1,155,042 are grouped with sundry debtors of £148,904, to which maybe added bills receivable standing at £12,654. Reserves amounting to £123.535 are held against the first two, but while reserves are being fostered, having risen some £lB.OOO, advances are increasing more quickly. When the welfare of the association is so greatly dependent upon advances, the experience of the past will probably tend to promote drastic treatment in dealing with them at the present time, and it may be assumed that no care has been spared in scrutinising each with its relative security before entry in the balance sheet, especially when advances comprise nearly 60 per cent, of the total assets.

A reduction has taken place in stocks which are valued at £289,110. The variety in their composition must cause their valuation to be attended with some complications. Their drop of over £45.000 may be due to lower prices more than to smaller quantities. Investments nt £9772 stand as before. Except that flourmill shares are represented to a small extent, no indication is given of their nature. In investments of such amount, it would be expected that some fluctuation takes place during 12 months, and it would be interesting to know on what basis their valuation is arrived at. Among the liabilities, the chief Item of bonds has now been grouped with fixed deposits under the designation of secured deposit stock account. The progress of the indebtedness at the latest three closing dates, has been as follows:—

Some increase has taken place in the total indebtedness, which although larger than those of the two preceding years, is well under that existing previously. Reductions have been effected in certain items, but it is when the amount due to shareholders on current accounts is combined with the bank overdraft that the increase is most apparent. Certain fluctuation in such items is inevitable, but the resultant larger interest bill may prove a heavy handicap. It must be disappointing to all concerned to find that the annual increase to the amount of outstanding dividends is growing larger instead of smaller. The prospects of the less-favoured classes in that respect of receiving a return look less bright than they did 12 months ago. making the test upon the patience of those shareholders so much the greater. There

is nothing exceptional in the position of this association, however, which, in common with all the financial -world, is looking forward to the lifting of the clouds. TARANAKI (N.Z.) OIL FIELDS NO LIABILITY. Paid-up Expen- Incapital. Beserves. diture. come. IQQf) x? x? April 30 .. 516,258 — 5,917 1,949 This company has its headquarters in Melbourne, but its operations are conducted in New Zealand. In consequence, ■ its officials are to a certain extent duplicated, the board of directors, bankers, and solicitors in Melbourne having all their counterparts in New Zealand. The company had completed its first year on April 30 last, and is still in the embryo stage, although it was not the originator of operations, but is the outcome of a scheme of reconstruction of the Taranaki Oil Fields, Ltd. Its primary object is the quest of oil, a lure second only to that of gold, and as its success, if attained id full measure, would benefit not only the shareholders concerned, but the community in general, considerable importance may be attached to the results obtained.

Meantime it is a case of sowing in expectation of a harvest in the future. The expenditure is mainly of a capital nature, which does not allow of a corresponding return. Against the ordinary expenditure of £5917 divided into fees, office rent and salaries (£4909), general charges (£930), and taxes (£7B). there is a set-off in commission, interest and rents aggregating £1949, the difference being placed to ge.neral development. The assets totalled £521,700, which consist chiefly of capital expenditure amounting to £222,160, and shares in kindred concerns valued at £210,297. The former is entered under different headings of which property account, comprising £199,653, forms the chief part. That item covers leases, rights, report, etc., the exact valuation of which must necessarily be difficult to determine, and dependent greatly upon what the future fortunes of the company are likely to ba. The same may be said of the general development account (£4543), which bears the deficiency on ordinary expenditure for the past year, and drilling account (£1866). There are more substantial assets of freehold properties (£3000) and buildings (£1716) both entered at cost, although it may be doubtful how far those properties would realise the money ex pended upon them if the original object fails. There is further drilling included with survey and camp equipment entered at £11,383. While the camp equipment would doubtless be a negotiable factor in the event of realisation, it does not appear what its individual value is. In addition there are the smaller accounts of vehicles (£833) at valuation, and office furnishings (£545) at cost, which, except for any depreciation that may have operated on the latter, should not be found wanting in case of need. The shares in other companies are distributed over Gisborne (£140,922). Waitangi (£15,000), and Waiapu (£54,375) Oil Fields, Ltd. As their position is contingent on conditions, similar to those of the main concern, their value is problematical meanwhile. The liability upon the shares aggregates £309,270. or nearly 50 per cent, more than their present cost.

Among the other assets, cash represents £7640, of which £7041 is held in deposits and accrued interest. Against the latter, however, there is a sum of £3310 due on deposit. In the case of the bank and cash accounts, the debits are placed against the credits in the balance sheet, but the fact of deposits not being treated similarly suggests that the respective deposits are on a different footing from each other. Stores and tools at £14,787 represent no inconsiderable sum, but some surprise may be caused at sundry doctors coming to the large amount of £64,742. although plant and materials, charged to subsidiary companies to an extent unstated, are included. The liabilities are few. Sundry ci editors stand as low as £lB9B, while the deposit accounts form an interest-incur-ring item of £3319. The capital sunk m the business thus nearly eouals the total of assets entered. The expenditure of over £500,000 in the project indicates the sanguine hopes of those concerned of the ultimate success of operations, and future developments will be watched with interest.

Fixed Deposit DiviCarry July Paid-up and Bond Reserve dead For'31 Capital Issue Fund Pref. Ord. ward £ £ £ p.c . p.c. £ 1919 638,867 553,913 170,000 6 8j 8,610 1920 772,639 605,071 178,081 6 85 12,061 1921 883.821 1,216,065 190,000 6 7 2,267 1922 883,974 1,169,700 131,134 6 1122,228 1923 879,924 1,060,184 8,907 —— — 7214,156 1924 879,924 1,037,493 — —. 7101,929 1925 972,341 1,027,082 — 3 796,073 1926 887,335 1,000,258 - 7338,912 192" 539,181 944,069 — *6 — 21,733 1928 539,414 932,017 10,000 6 17,024 1929 539.644 892,155 20,000 6 19,133 1930 539.943 888,451 40,000 *6 4,164

July 31, July 31, July 31, 1928 1929 1930 £ £ £ Bonds 530,000 530,000) —888,451 Deposits 380.490 362.1-55) Fixed Deposits 21,527 38,105 41.854 Accrued Interest .. — — 25,193 Shareholders’ Current Accounts .. 243,738 309,266 263,066 Sundry Creditors 63.228 58,824 56,756 Bank 73,588 3,943 83,048 1,312,571 1,302,293 1,358,368