MOA FARMERS' UNION.

Taranaki Herald, Volume LIV, Issue 13798, 2 November 1908, Page 7

MOA FARMERS' UNION.

ANNUAL MEETING. FINANCIAL POSITION DISCCSSED. i The annual meeting ot .shareholders. ' in the Moa Farmers' Union was held ] in Pennington's Hall, lnglewood. on l Saturday. Mr D. Todd (chairman of ; directors) presided, and there was a J large attendance of shareholders 1 REPORT AND BALANQE-SHEET. ] The annual report expressed tho re- i gret of the directors that the result of the year's operations had been less satisfactory than they could desire. The X late spring, the autumn drought, and \ consequently diminished revenue of the « district were responsible for this. The ' report continued: "At tho last general I meeting your directors recommended j that the business should bo conducted 1 on strictly cash lines, and have moved * m that direction with little success, the ( accommodation required by our share- „ holders being greatly in excess of the j capital provided by them for the conduct of the business. Your directors now suggest that you should resolve * that no credit be given to any shareholder beyond the value of the shares hi tlie company held by him. Your directors are still of the opinion that ( the. carting is not remunerative, and } leave tho question of its continuance ( for your consideration. After providing for depreciation and bad debts, , there remains a balance of £246 7s 8d lor distribution. Your directors re- \ commend that a dividend of 5 per cent. , be paid on the share capital, and the balance carried forward." j The balance-sheet showed the capital ; of the company to be £1642 12s 6d, lia- . Inhties to the Bank of New South' \ Wales amounted to £2000 on the property and £2423 13s 3d on current ac- j count, on trading capital account , £'4800. butter ledger accounts payable \ £164 3s Id, general ledger accounts payable £2163 16s 6d, bills payable £3995 7s 2d, loans £394 8s 6d, and un- ' claimed dividends £177 10s lOd. The < assets as set forth in the balance-sheet included: Land £900, store and buildings £2026 2s, plant account (less £73 12s 8d depreciation) £911. goods ledger I accounts receivable £4372 8s lid, gen- < eral ledger accounts receivable £808 2s 6d, butter ledger accounts receivable £137 15s Bd, shares in the Egmont Box , Company and Manchester Wholesale Co-operative Company £40 and £20 12s 6d respectively, bills receivable £618 9s sd, stock-in-trado £8023 13s, cash in hand £263 10s 9d, leaving a balance of £246 7s Bd. The profit and ' loss account showed that wages and 4 management cost £3184 15s Id, £41 ] 12s 9d had been written off general ledger accounts and £118 7s 5d off : goods ledger accounts, £73 12s 8d had been written off the value of plant but \ nothing off the buildings. A sum of £'90 ss, shares forfeited, was placed to the credit of this account, and also j £103 Is sd, amounts written off as bad , but received. The gross profits on trad- j ing account amounted to £3452 5s Bd. ! CHAIRMAN'S REMARKS. \ The Chairman, in moving the adop- } tion of tho report and balance-sheet, , made a few remarks concerning the y year's business. The year had been a i very tight one for money, and two months of dry weather had made matters worse. Then, to make it still worse, \ the Bank had come along a month ago- ( and wanted its money, amounting to £4500. It was for the shareholders to ] consider how they were going to pay j the Bank off. It seemed to him that ( every chairman in tho past seventeen . years had asked the shareholders to ( take up more shares and put more ] capital into the concern, but it was like pouring water on a duck's back. All ,< they had to carry on the business with < was £1600, or an average of less than < two shares per man. It was ridiculous \ 1o expect the directors to conduct a ' -\ business like this with a turnover of £3000 on £1600, and it was time some- ( thing was done. The directors had put off one of the delivery carts and sold tho horses and sacked the man, but . they had kept on the other cart until . such time as the stock should have been ! reduced. They had now about £8000 \ worth of stock in the institution. During the past year about £400 had been \ spent on a new bakery and plant. This would be a good investment and was 1 already saving about £3 per week. ] Mr Davidson seconded the motion , for the adoption of the report and bal- J ance-sheet. . , A DISCUSSION. ; Mr M. Hopson drew attention to the j great decrease in the net profits of the 1 uftion. In 1906 the net profit amounted i to £16 19s 4d, last-^ear to. £143* 3s 4d, J and this year to .£6 10s Id. ft was very, evident they could not go on like this, , and something must be done at* once to remedy the state of things. The gross ( profit showed a reduction of £400, and the sales were £1000 less, whilst if they went back four years they would find that the latter item had decreased to the extent of £2000. The bank overdraft was £475 16s more than last year. He did not wonder that the Bank , wanted to call the money 1 in. Bad debts, which were no doubt ruining the < union more than anything else, had amounted to £1710 9s 7d in thirteen years ; in other words, £67 more than their capital. Bills now amounted to £3995 7s 2d, brought about by the directors not having sufficient cash at their disposal to manage the business. The union had lost between £500 and £600 in interest on these bills alone during the past year. The ledger account had gone up £510 since twelve months ago, and wages also showed an increase. Then there was no doubt the tea rooms had ptit the union back considerably. They had been carried on at a loss. Why should they do this? It would have been far better to have sold them and put the money into the business. The Chairman : They should never have been .bought.. Mr Hopson agreexh 'Referring to the; general outlook, he said there appeared to him to be only one way out of the difficulty. They must either dispose of the property and business as a going concern — he understood they had an offer —or go into liquidation. He would suggest that the meeting should be adjourned for a fortnight or a little longer to enable the directors to frame a scheme and bring before the shareholders. He. mentioned that many of the shareholders had no responsibility in the matter, but he and twenty others were guarantors for £100 each and would like to see something done. Mr B. Robinson : Why not reconNiruct the company on commercial lines and not co-operative, and call for applications for shares iv the usual manner? Mr Tarnlee said he had understood from the last annual meeting that the accounts of the different departments of the union's business were to be kept separate. The balance-sheet, however, did not show this. He asked for further information. The Chairman said the secretary had received instructions to carry out the siif^estinn of the shareholders, and he had made a promise to do so. but it v .i-j found impossible unless they had another clerk or two in the nffire. Therefore only rough accounts bad been

J Li-pl and an\ mlonnatioi) i djxti niii'j, * ! tJicm could bo got at tho office. Jt w:n ; not considered w iso to put it on the balance-sheet or to mention at that meeting how each department c^iiic out. It would be giving the business Mr Tarplce said it affected the interests of the company, and he thought the shareholders had a perfect right to have the information laid before them at the meeting. It was certainly implied at the last annual meeting that this would be done. He agreed with tlie suggestion that the meeting should be adjourned to enable some scheme to be formulated, hut the directors should have the assistance of a committee chosen from among the shareholders, who could also find out why the profits were so small on paper. The net profits were shown at £6 10s. but if they took into account the £90 share capital that had been written off and placed towards the reduction of the liabilities for the year's working, and also £103 amounts written off as bad but received, instead of having a net profit of £6 10s they would have a good deal less than nothing. He would also like to point out that there had been nothing written off the buildings for depreciation, although in previous years this had been done. The Chairman said the directors thought it hardly necessary to depreciate the buildings, the value of which was set down at only £2000, whilst the Government valuation was over £3000. Mr Tarplee said it was only fair business to do so. Each year's working should bear its share of this liability. Unless this was done the balance-sheet was misleading to that extent. Mr T. Nicholls (secretary) said all these deductions had been made, and it was then they had a net profit of £6 10s. Regarding the keeping of departmental accounts, he found this impossible with the assistance he had at his command. He had, however, made some sort of approximation of the' two departments, but this was not worth giving to the meeting. To have carried out the desire of the shareholders he would have required the services of another clerk at a salary of at least £3 per week, and the object last year was to keep down expenses. So far as the profits were concerned it was easy to see that where they were lacking was in the want of capital. This necessitated three and four months' bills, with the result that they lost on an average 3 per cent, on their purchases. This was the whole explanation — want of capital. They were running a business doing a turnover of £3000 on a paltry sum of £1642, which was not enough to run a business of £6000 successfully. The directors and management were taking the risk in signing a guarantee for £2500. The shareholders were only risking what little bit they had paid in in the shape of share capital— an average of 35s per man. The position they had arrived at now was that they mußt make provision to raise £4500 to pay to the bank, either by borrowing it on land and buildings or finding it out of their own pockets. The alternative was to sell the business as a going concern, and, as Mr Hopson said, they had an offer. Otherwise they would have to go into liquidation. This £4500 would have to be collected from somewhere and the bank paid off before they could continue business. Exception was taken to the fact that these- alternative proposals had not been placed before the meeting by the chairman . Mr B. H. Nicholls (manager) said Mr Tarplee evidently had a very wide knowledge of business affairs. If he could inform him of any business with a turnover of £30,000 that was being carried on with less than £2000 capital hp would be placed to go and take a tip from the manager of that concern. So far as departmental accounts were concerned, supposing they did lose on some, it was the shareholders who were getting the benefit. They did not want to make large profits. A Voice: Wo want to keep the prices down. "My experience has been," continued Mr Nicholls, "that if you have anything to sell you want the very highestprice for it, and if you want to buy anything you want it at the very lowest price." For some years past the Bank had been good enough to allow them to overdraw their guarantee, but now for some unexplained reason this privilege had ceased. The shareholders must now find tho money to finance the affair or go into liquidation. He did not look upon the position as at all serious. He was one of the guarantors for £2500, and could assure them he had never iost one moment's sleep. On the balance-sheet the company could lose -£5000 and-still pay every penny it •^wSd."' --■"-.- 1 - ' Mr Tarplee said tlie' directors had been using the £4800 of undivided profited, The union sold its goods at no cheaper rate than other shops, and why wa6 there only 11^ per cent, gross profit ? So far as wanting more capital was concerned, he would not expect to receive any in the face of such a bal-ance-sheet as that now before them. Mr Price said the Bank had asked •for/its money and would not wait. They must make an effort to meet the Bank themselves or hand over the business to spmobody who would do so. What Mr Nicholls had put before them seemed practical, but would he be prepared to take over tho business and meet the liabilities ? The fairness of the question was challenged, and Mr B. H. Nicholls said ho wished some of those present would go to see him every day instead of one day in each year to find fault. Mr Price said it would be a calamity to tho district if the Moa Farmers' Union went under, and if it were possible something should be done to put it on a sound basis. They must find ways and means of meeting the Bank. It Was impossible to collect share capital. A Voice : Go to another bank. Mr Price: But wo must pay this one off first. Mr B. H. Nicholls said he was not prepared to answer Mr Price's question. He could, however, find a dozen or even more people who would be pleased to take the toisiness over. Apart from that, however, if they chose to increase their capital he and his family > would be prepared to take up 2500 shares. Mr Price said he had no faith that , people- would take up-the shares if they were offered. [ The advisability of liquidating was discussed, and the opinion was expressed that liquidation would be to sacrifice the whole concern. The liquida- , tion of the New Plymouth Co-operative Stores was instanced. Mr Hopson said the two businesses could not be- compared. In the Moa I Union they had un excellent system of , bookkeeping. , Mr James Bridgman complained that . custom had been driven away from the stores. He had gone with cash in his 1 pocket for a sack of chaff, but tlie man in charge had refused to supply him. l although seventeen s,«irks were on hand ' Mr B. H. Nicholls said Mr Bridgman , could not be supplied because every t sack of chaft in the store at the time ■j was ordered. Mr BTidgm.m contended that his cash , not have been lefiibed lor tho

s.ik«> ot .moi.lci I"! v hit Ii p.iymcnl had nt'ihaps not y<>t \iw\\ niiidi-. Mr J. Biirli s;nd those jicoplc uho had book debts (which nltogether amounted to £.5000) should pay up. "J his would help thf directors along. Ihe unpaid shares should also ho paid up, and then tho union uould be able to say |iood-bye to its present bank and rind another. Mr Hem\ood asked \i pressure had been brought to boar on those people who owed accounts. The Chairman said they always had someone before the Court. Mr Henwood said that credit should be stopped and the business carried on on a cash basis. In reply to Mr Barli, Mr 1. Nicholls said tho biggest amount oji the books was £80. Tlie average right through would be about £4. Mr Henwood asked what proportion of the book debts were accounted for by non-shareholders. Mr T. Nicholls said one per cent, would cover this. • Mr Henwood : Then there should be no difficulty in handling the shareholders. . Mr T. Nicholls said he was afraid it would be almost impossible to do a strictly cash trade. Mr B. H. Nicholls was also oi this opinion and pointed out that for three months of the year tho majority of the shareholders had nothing coming in. Tho union had been as good as a bank to the district for years, and the directors and management deserved all sorts of credit instead of blame and abuse. He would be very sorry to see the union go under, and would put every penny he had got in this world into it to keep it going as long as he could. In reply to a question, Mr T. ISicholls estimated that the book debts would be reduced by £1500 by tho end of December. He had looked upon tho book debts more in the nature of a bank for the convenience of the shareholders, and many of those who were decrying this credit system had been only too pleased to accept their generosity in that direction. The union had helped many shareholders out of tight corners in days gone by. Tho management sliould not be blamed but thanked. A general discussion continued, and eventually Mr R. C Hughes moved that a committee should be sot up to confer with the directors with a view to deciding what course should be pursued. Mr Hopson seconded. Mr B. H. Nicholls said that the only men who had a say were the directors and the guarantors. He or any other one of these could wind up the business at once if they wished. Tho committee should therefore be composed of guarantors only. The motion was carried. Messrs M. Hopson, A. Morton, Havorbier, Mackie. Henwood, and A. Brown were appointed to form tho committee. The meeting then formally adjourned for fourteen days.