IMPROVED POSITION.

Auckland Star, Volume LXIII, Issue 178, 29 July 1932, Page 3

IMPROVED POSITION.

FARMERS' FERTILISER CO. EXTENSION OF ACTIVITIES. DIVIDEND OF 5 PER CENT. "A very marked improvement in the company's position is how I can best describe the result of the past year's operations," stated Mr. A. A. Roes, chairman of the New Zealand Farmers' Fertiliser Company, Ltd., in his address to shareholders at the annual rnecting held in the Chamber of Commer.ec this morning. "I am only repeating a well-worn phrase when I say that we are passing through very strenuous times, and it ie tho reverse of consoling to know that tho depression is world-wide and consequently the process of recovery is hound to be so much more difficult. The future, however, is not without hope. Our principal customer, Great Britain, is meeting her problems in a very masterful way. Her departure from the gold standard makes more possible a substantial recovery in prices. The recent conversion of the two thousand million war loan to a 3i per cent rate of interest and sundry other important adjustments will materially aid in the reduction of costs in British industries and in the regaining of her overseas trade. The Ottawa Conference should evolve something of advantage to the Empire, while tho Lausanne Conference has already made, a marked improvement in the international outlook. All these things must eventually react to our advantage in New Zealand. "The plight of our primary industries is; certainly very serious and the road to complete recovery will be long and arduous. However, many adjustments have already been made, all tending to meet the position which hne arisen, and it only requires a definite upward movement in the prices of our primary producte, which is a possibility that we cannot rule out, and which may eventuato sooner than we expect, and things would present an altogether different aspect. The Government is to be eommended for its practical effort to relieve the farmers' difficulties by the subsidy on fertilisers. This has served a twofoM purpose. It has been successful in encouraging farmers to maintain and increase production and at the same time it has stimulated the fertiliser industry, which is one of the most important of our secondary industries, if not the most important. 'Because of its value ae a means of increasing production it may rightly be. described ae a secondary industry of primary importance. Reduced Prices, Bigger Output. "With the advent of the subsidy and in tho hope of a very much improved demand, manufacturers and distributors made further contributions, which made possible a very substantial reduction in tho price to the farmer. The result was a considerable improvement in output, and even at the low price a better financial return to the company, as the figures show. I wish to say, however, that manufacturers are working on very close, margins, and the present low price can be maintained only if output is assured. "Considerable improvements in manufacturing methods have recently been introduced resulting in a greatly improved product and this, in addition to the greatly reduced price, will serve to show that this company is doing its sharo as a farmers' concern in assisting farmers to make the adjustments necessitated by the present conditions. "In our efforts to give service we have for some time past been issuing monthly to 35,000 farmers in the North Island a littlo publication entitled 'The Fertiliser Record.' The object of the publication is to convey to farmers information of a worth-while nature and the articles which the record has contained, I am sure, will bo looked upon by ail recipients as possessing something of an educational and instructive value. We have amplo evidence that the expense is moro than' justified by the good will which the publication has brought to the company. "The question of the manufacture of other lines besides acid fertilisers has been engaging the attention of your directors. We have for some time been manufacturing and marketing sulphate of iron, which is an effective remedy for iron deficiency in soils and is used for many other purposes; also ferrous ammonium sulphate, which is used for the improvement of lawns and sports grounds. We are completing the erection of a plant for the manufacture of sulphato of copper, which is too well known and too widely used to require any mention of its uses. We have also some further developments under way, and these extensions will, I am satisfied, be of considerable benefit to tho company financially and otherwise. They will probably, as time goes on, become more and more important, and thus obviate tho necessity of the company depending altogether upon ono line of manufacture. Balance-Sheet Analysed. "Coming now to the principal business before the meeting I will refer to a few of the main aspects of the balance-sheet. Our liability to creditors stands' at £10,930, as against £18,348 last year, showing a reduction of £7412. The bank liability shows a considerable reduction, having come- down by £39,434, which is in keeping with the indications I made in my address last year. A sum of £2352 has been added to reserve account, which now stands at £20,000. It is the policy of your directors to add to this account from year to year as profits will permit. The liability for unpaid dividends is down by £008. "On the assets side of the balancesheet the item of land, buildings, plant and machinery ehows a reduction on last year of '£G303, but these assets were added to during the year by more than this figure in new capital expenditure. They arc being steadily written down and to-day can be considered as standing at a very safe valuation for two large, well-equipped and up-to-date fertiliser works. j Tho end ot tho financial year as nowfixed comes near tho end of the annual busy period. It is not necessary to carry: stocks at this stage, as there is always a lower output during the winter: months. The low value of stocks shown in the balance-sheet is an indication that there is no unnecessary tying up of capital in that direction. I may also mention tho values are on a safe basis. The increase in sundry debtors account of £9000 is an indication of the increased business as compared with the same period last year, and I wish to a,"-ain mention that as a result of the company's policy tho bad debts still remain a negligible quantity. Profit for the Year. "Tho net result is that after adding £2352 to reserve there remains a profit for the year of £13,432 12/3, which, with £20,009 9/7 brought forward from last year, makes available for dietribu tion ' £33,442 1/10. The directors propose to pay a dividend of 5 per cent,

absorbing £13.099 15/, and to carry forward the balance, £20,342 0/10, to next year's accounts, thus making a total reserve of £40,342 0/10 and showing tlucompany to be in a very sound position "I wish to say in conclusion that I am fortunate in having associated with me on the board of directors members who have always carried their responsibilities seriously and who take the keenest interest in the company's welfare. Their splendid co-operation ha~ made, my ta«k a comparatively easy and pleasant one. I now take pleasure ill formally moving the adoption of the report and balance-sheet." Death of Mr. J. Boddie. Reference to the great loss the company had sustained in the death of Mr. James Boddie since the last meeting was made by the chairman. He said that, apart from the original promoters of the company, Mr. Boddie, more than anybody else, was responsible for ite formation. He had a very high opinion of its value to the farming community, and it was a great satisfaction to him when the company got properly under way. "His genial personality and wise counsel will be very much missed by the board," added Mr. Roes, in asking the meeting to stand in silence as a mark of respect to the former director. Directors Congratulated. Mr. It. H. Mather, in seconding the adoption of the chairman's report, congratulated the directors on entering the dividend list again. Though 5 per cent was not a very fat dividend, it wars very considerable in the difficult times in which the company was trading. He urged the directors to refrain from paying big dividends, but to concentrate on building up the reserve fund. By doing that, it would be possible to buy m the cheapest markets, and the company would earn the good will of everybody. Mr. W. Dawson, in speaking to the motion, raised the question of the coet of the company's publication, "The Fertiliser Record." Mr. S. I. Crookes commented that everybody would appreciate Mr. Mather's remarks. While the dividend was only <> per cent, they were thankful that the company could clearly afford it. The directors were working on a conservative basis, so that there would be no blank years in the future. He could assure the meeting that the company bought in the cheapest markets. Referring to the cost of the company's journal, he stated that its publication had been decided on only after serious thought. "I think the farmer wants all the education he can get," stated Mr. Mather, in expressing the hope that the journal would not be discontinued. "If it was not for fertiliser and the freezing companies the country to-day would be in a very bad state." Reduction of Liabilities. Mr. Ross, in replying, said it would be a bad policy to pay a big dividend in the present times, even if it it could be afforded. They had to remember their liability to the bank, and the directors always had in view the desirability of reducing it; last year they had done so very considerably. The company bad a very solid reserve, and something to carry them on even if they continued to meet rough seas. Adequate depreciation of the assets had been allowed for. The "Fertiliser Record" had been a sound investment, and they had to remember that it was their duty to educate the farmer in the proper use of fertilisers. After the report and balance-sheet had been adopted, the retiring directors, Messrs. J. S. Connett, F. R. Flatham and G. L. Marshall were re-elected. A tribute to the staff was paid by Mr. S. I. Crookes. They were liard-working, enthusiastic and loyal, and the cut they had suffered was in common with that of the directors and shareholders. He hoped 'in tho near future the company would do something to recompense them. If anything, the staff had worked harder than ever for less money. Mr. J. McK. Wilson, general manager, acknowledged the tribute, and stressed the co-operation of all members of the staff. In proposing a vote of thanks to the directors, Mr. Dawson stated that the company product was entirely used by the farming community. It was difficult enough to make profits in city concerns, but it was infinitely harder in country dealings. The financial position of the company reflected great credit on the directors, particularly when it was realised that some of the biggest financial institutions were not able to pay dividends this year. Good Year Predicted. Mr. Ross predicted an even better result at the end of the next financial year. The continuation of the Government subsidy enabled the company to sell at a low. price, and one that induced the farmers to use larger quantities. He thought that rock bottom had been reached in the prices for primary products, and there were already indications of an upward movement. That was another reason to expect better results. The directors were all tho timo studying economy and looking for channels in which business might be expanded. Mr. Crookes drew attention to the fact that every penny of the subsidy was passed on to the farmer in reduction of prices. The subsidy had not been utilised in paying the dividend. The meeting concluded with a vote of thanks to the chairman. |