LOAN AND MERCANTILE.

Auckland Star, Volume LXII, Issue 15, 19 January 1931, Page 4

LOAN AND MERCANTILE.

ANNUAL MEETING IN LONDON.

HEAVY DECLINE IN PROFITS

CHAIRMAN'S STATEMENT

"To the disastrous fall in the prices of wool and the general decline in the prices of other commodities in which it is the business of your company to deal, combined with the universal depression which has existed, and still continues to exist Jii so many countries, must be attributed the decline in the company s pronts ior the period embraced in the accounts, these being, as you are aware, largely derived from commissions on the sale of wool and . other produce. The results are disappointing, although, in view of the existing conditions, they could hardly be otherwise. This was the statement made by Mi'. Alfred Shepherd, chaiiman of directors of the New Zealand Loan and Mercantile Co., to shareholders at the annual meeting, held in London on December 4. As already notified by cable, net profits had dropped from £179,716 in 192!) to £76,550. Detailing the year's business the chairman S The company dealt with 225,060 bales of wool in Australia during the year, as against 242,837 in the previous year. The company's business in New Zealand showed a considerable contraction, owing to a large extent to the fact that many far-mere refused to sell their wool at the unattractive prices ruling. The company sold 47,970 bales, as compared with 62,844 bales in the previous year, being u! decrease of approximately 23-14 per cent. The dairy industry in New Zealand and Australia did not at the end of .June last show euch a bad position as was experienced by the producers of other commodities. The quantities of butter and cheese handled by the company in the hoin.e markets and abroad during the year showed an increase of approximately 25,000 boxes of butter, but a decline of slightly over 3000 crates of cheese. The quantities of mutton and lamb dealt with by the company showed an increase.

South African Business Purchased. '"In the spring of this year," continued the chairman, "Mr. Paine and 1 made a trip to South Africa, and when there inquired into the prospects of your company taking an interest in the wool business. Mr. Paine and I investigated the position carefully, and. on our recommendation, practically the whole share capital of the Union Produce Mart of Durban — which docs a business on very much the same lines as that conducted by your company—was acquired. The price paid for the shares of that company after long negotiation was, so far as we could learn, fully represented by the assets possessed by the company, without taking into account any goodwill, and we. have every hope thatjjthc purchase may prove a beneficial one. The shares were acquired, and the business taken over as from July 1, after the close of our accounts, so that the sum paid (and it was not a large sum) does not appear in the accounts now before you. It will be reflected in next year's accounts." On the liabilities side of the balancesheet bills payable showed an increase of £6300 in the acceptances connected with the mercantile business. Current and other accounts showed a reduction of £155,300, mainly in respect of balances owing to clients relating to consignments, etc. Temporary advances from bankers and others showed an increase of £121.900, due to an increase in loans and advances made to clients.

On the credit side of the account the deposit of £50,000 shown last year did not appear.' The amount of cash with bankers on geVieral account was reduced by £63,000, while the investments at or under market values showed a decline of slightly less than £5000. The decrease in these items was reflected in the increase of secured loans.

On the debtor side of the profit and loss account the general administration expenses showed an increase of £17,080, due, to some extent, to the fact that in this account was now included payments by the company in connection with tiie pension funds, this charge taking the place of a contribution to the benevolent fund (last year £10,000) hitherto shown in the balance-sheet. Without exception every officer entitled to do go joined the pension fund, which should be of great advantage to the members of the staff and to the company.

On the other side of the profit and loss account the balance of commission, interest, and other accounts showed the most unsatisfactory decrease of £ 115,300. The result was that after payment of interest on the first and second mortgage debenture stock and payment of the preference dividends the company's profits for the year were more than exhausted, and the interim dividend paid and that now recommended to be paid on the ordinary stock came out of the balance carried forward from last year

Economies Effected. In concluding his address the chairman said: — "It must not be overlooked that, the decrease in profits does not arise so much from the decrease, in the quantity of wool handled, but from the low prices obtaiir-.i. We cannot close our eyes to the fact that wool rose to a price which, if it had continued, might have seriously affected the demand. H has now fallen to a low price, and many experts feel that it will not again rise to the heights it reached a few years ago—in fact many feel that it may not be desirable that it should rise to such a price.

"Your directors have accordingly for eome time past been considering what steps might be taken with the view of improving the returns earned by your company on the capital employed, and economies have been effected in several directions. 1 may say that our endeavours, while they have included the consideration of the reduction of costs, have been and will continue to be devoted also to the question of increased efficiency. As stockholders you may rest assured that the directors will not relax their efforts to find out satisfactory ways to improve your company's business."

The report and accounts were adopted: Mr. W. W. Paine and Lord Ritchie, of Dundee, were re-elected directors, and a hearty vote of thanks was passed to the directors and the staff in London and in the Dominions.