FARMERS’ UNION TRADING CO. (AUCKLAND), LTD.

Taranaki Daily News, 23 May 1921, Page 7

FARMERS’ UNION TRADING CO. (AUCKLAND), LTD.

BOND ISSUE AT 7 j PER CENT.—-A SOUND AND PROFITABLE INVESTMENT. (By “Cambist,” New Zealand’s Leading Financial Critic.) Few people realise that during the last five years the whole capitalistic system of this country has been evolving, and resolving itself into a mighty force. The Dominion has become immensely richer, and at the same time all of its financial requirements have enlarged beyond the bounds of previous conceptions. Such is but the natural outcome of economic evolution. New Zealand, to begin with, has been drenched by Nature with every possible blessing; a splendid climate, fertile soils for all purposes, making for the comfort of mankind an inexhaustible source of varied wealth. Having so sound a basis to work upon, but not to dream over, it is not surprising to find that the demand for capital is now equalling the supply of available funds. No longer is it safe or profitable to conduct business on borrowed money repayable at call. The time for that sort of “happy-go-lucky” finance has passed. The public must be assured of the soundness of any institution, or individual, requiring financial assistance, before one penny is advanced to {borrowers. Unless this primal assurance is forthcoming, not a single transfer of cash should take place This principle, if rigidly followed by borrowers, as well as lenders, will keep the whole community free from financial panics, for all will be assured, that the uses of money are based upon sound financial considerations.

“Cambist” is well qualified to comment upon the affairs of the Farmers’ Union Trading Co. (Auckland) Ltd. He has been allowed on many occasions to see it from the inside. He has always advised his farmer friends to “stick to it,” and build up its capital account without fear. That this advice has been followed goes without saying. Today, more than half of the authorised capital is subscribed. The authorised capital is .£1,000,000, and the subscribed capital is no less than £568,460. Few people realise what a great sum a million pounds is, let alone a half million. The consolidation of even the last mentioned sum connotes a financial force full of profit-earning power, as well as profit-saving service. Yet in the case under notice, there is not sufficient “ready money” available to secure, or acquire the full measure of profit, and service which is justly due to this wonderful association of money makers, and co-operators. In this writer’s opinion, there is immediate need for the use of £250,000. The wants and requirements of 16,000 working farmers must be supplied at the lowest cost possible. The working farmer is the best proposition in wealth production in the Dominion. It is owing to his hard working “stick it out” tenacity that most of our exported products fill the outgoing ships. To his continuous labor, our towns depend upon their food supplies, besides much body coverings. The whole of the farming pursuits continuously hold the members in co-operative bonds with Nature, and with work'. This never stops for a moment, as the appointed seasons roll on their Go4-directed courses. Never yet lias the farmer been able to shorten his hours ql toil, nor to put restrictive bounds to his output. All of this partly explains why it is safe to lend money to farmers’ enterprises; it also gives considerable instruction to the investor who desires safety, certainty and profit for his or her money. A SOUND BUSINESS PROPOSITION.

Is the Farmers’ Union Trading Co. (Auckland) Ltd. a sound business proposition? That is a pertinent question that must be answered before going further. “Cambist” at once gives an emphatic reply in the affirmative. He does so on the following grounds, namely, that the financial groundwork is strong, having a subscribed capital of £568,460. with legal opportunity for enlargement to £l,-000,000; the uncalled subscribed capital was at March last £157,117, which in the natural course of things is being paid in month by month according to the terms of its allotment by each liable subscriber; if never another share were allotted by the Company, in a short period of time the whole of the subscribed capital of the company would be turned into paid up capital; but there is likely to be much more subscribed capital shortly, for the company should continue to accept offers for their shares until the whole authorised capital is gathered. No doubt this policy will be adhered to, and kept in operation by the company, for it is a progressive institution and it must go ahead with the times.

Now it is time to look at the business record of the company. During the year ending March last, the merchandise sales increased by the amount of £499,513, so that a trading record of direct sales to its customers totalling £1,484,513 was actually accomplished. It would appear from these figures that an increasing trade had been maintained at the rate of £lO.OOO per week; that taking the sales a| the total amount quoted, the weekly average has been £28,548. These figures <»ive a threefold cause for astonishment, the first is the fact that the business was 90 virile that it grew at a rate of fifty-one per cent, spread over the year. The year started with a million turnover; it had a half million increase at the end; while the weekly turnover kept on growing by thousands of pounds. Besides the direct trading with its customers, the company had an internal trade rapidly developing. This trade has to do with the manufacturing and wholesaling branches of the concern. For the year just closed £630,854 worth of goods were handled, making a weekly of £12,132. Taking all branches of the business in a comprehensive total the sum amounts to £2,115,366, that, again, being computed at a weekly rate gives a turnover of £40,680 per week. The business has proved :to be both safe and profitable to the [company, besides being a distinct boon -to every shareholder customer on its (books. Over £24,000 of rebates or bonuses will be paid out to these fortunate customers The shareholders xA’ho own the paid up capital receive 1 eiight per cent, upon the ordinary shares, the preferential shares are paid tjhe stipulated rate, namely, six per rfent. After doing all these things, there is still a satisfactory sum left to bje 'carried forward to next year. All,of the foregoing facts go to prove that the company must be giving worthy service tk> its customers; that its business is yjery profitable; that it is only 4ng on merit; that there is huge goodwill $n the trade it carries on; that it is a proposition worthy of the careful coni’sideration of investors who need a safe land profitable investment free of all W'orry

As a finish to this short review of a wonderfully engaging offering— £250,000 at seven and a-half .per cent, per annum, the interest payable half-yearly, “Cam- > bist” desires to impress upon investors how safe the business is. There are 16,000 shareholders in the company. If t-he whole issue of bonds is taken up ( £250,000) the borrowed money will only be £l5 12s 6d for each shareholder. Should, however, the company stop at the minimum issue ( £100,000) the debt of the shareholders will only be £6 ssper head. To top off, to secure the investors to the extent of £250,000,, over £500,000 of real capital protects' the loan; the assets of the company; the profits of its immense business; and the undoubted goodwill of the co-opera-tive combination, may all be thrown in as a make-weight of security that will tip the balance for safely into the region of sound security. The investors in these bonds can name the date of repayment. They can lend their funds for a period of four or eight years as they desire. The bonds are so good that “Cambist” has been informed by the chief manager of the leading bank in this country that that bank would be only too pleased to advance money against these bonds if ever they were proffered to him as a sound security. What is good enough for a bank should suit any investor.