A LOSS OF £90,000.

Taranaki Daily News, 25 October 1922, Page 5

A LOSS OF £90,000.

CO-OPERATIVE ASSOCIATION. BAD TIMES IN SOUTHLAND. QUESTION OF MANAGEMENT. A total loss of £90,000, some £lO.OOO more than the subscribed and uncalled capital, was the result of the year’s operations of the Southland Farmers’ Cooperative Association, a concern of 2500 shareholders, with branches at Invercargill, Gore and Winton. At the annual meeting the chairman, Mr. Hugh Smith, attributed the association’s grave position to the slump and bad management. “Although the balance-sheet shows a loss of £37,567 8s fid,” he said, “when the accounts of the various branches of the association were valued and assessed, it was found that provision would have to be made for further loss aggregating £53.000, making the total in the vicinity of £90,000. This will mean that the whole of the subscribed capital of £65,878 and the uncalled capital of £25,000 odd is completely lost. We have the sum of £151,843 10s 7d on deposit, £llO,OOO approximately due in December, 1922, and the balance of £46,000 in June, 1923, if no alterations be made in the moratorium; There is a further item of £52.000 representing sundry creditors whi(£h may be called up any day. . . Tn 1920, a. nominal profit of* £14.000 was made, on which the association paid dividends, but it is pretty •certain that if the same strict inspection and assessment of accounts had then been made as has been recently completed, the association would have shown no profit. The directors and families between them have £lO,000 on deposit. £lO,OOO in shares, making £20,000 in all, as well as joint and several liabilities to the bank for the overdraft of £26,330, so that loss to the association hears most harshly upon the directors themselves.

MEETINGS WITH DEPOSITORS. “Shortly after the last annual general meeting held at Gore, the graveness of the position became apparent, while the general manager, asking for one month's leave, resigned in October. We got into difficulties with finance, and on November 10 an extraordinary meeting of shareholders was called to consider the question of revesting the Winton branch of the business in Hamilton and Company, but the proposal was turned down. On December 23 it was founit necessary to hold a depositors’ meeting inviting the depositors to convert their deposits into depositors’ preference shares free of income tax at 7 per cent, cumulative interest. Altogether £30,000 worth of such shares were applied for, but £50,000 worth was necessary for allotment to be made. This matter, therefore, is still in the air. the directors not pushing this scheme when fully acquainted with the position. On March 21 another extraordinary general meeting of preference shareholders agreed to let the depositors come in ahead of them, and on the same date an extraordmary general meeting of shareholders decided in favour of the proposal to give depositors preference. On April 7 a general meeting of preference and ordinary shareholders confirmed the resolutions of the previous meeting. “The estimated loss was between £3O 000 and £40.000 when this appeal was made to the depositors. Now thgt we find the loss is so great as £90.000 we think it would be unfair to ask the depositors to convert their deposits into shares on these terms. The only sugaestion I can make is for the shareholders, ordinary and preferential, to join with the depositors and convert the deposit. money into share capital. 1 shareholders agree to forego their Shares and £lOO,OOO of deposit money be converted into capital, with the assistanee obtainable from the bank and. the careful limitation of business activities to reassured and reproductive channels, it will be possible safely to pay to the depositors a good return on the money so invested.’’ APPEAL TO GOVERNMENT. In reply to a shareholder, the ctiairman said'the losses at Gore were prob- ' ablv caused by the late manager having I extended too‘much assistance ,to some clients. The directors were , a PP all ®» when they went thoroughly into the matter after the last annual meeting to find the position they were in. Hie advances made were mostly to men on the land, and also for the purpose of carrying on these men. . He said he had received a note a few days ago from Mr. Adam Hamilton, M.P. The latter pointed out that it was more than possible that the Government might render some assistance to business co-operations to tide them over their present difficulties and help them to carry on for a time. Mr. Hamilton’s suggestions might come to nothing, but the Government was considering the matter. The chairman, in reply to another question, said the book debts at Gore amounted to £97.000, at Invercargill to £BO,OOOO, and at Winton to £30,000. A sub-committec was set up to toi..mulattt a scheme of reconstruction.