PERMANENT INVESTMENT ASSOCIATION.

Press, Volume XLVIL, Issue 7748, 31 December 1890, Page 3

PERMANENT INVESTMENT ASSOCIATION.

A special general meeting of the share" holders in the Permanent Investment and Loan Association of Canterbury was held last night at the rooms of Mr Chas. Clark, Hereford street. The meeting was called for the purpose of considering the balance sheet and declaration of a dividend. The Hon. J. T. Peacock, Chairman of Directors, presided. There was a good attendance of shareholders. The Chairman said—Gentlemen,— When addressing you at the ordinary annual' meeting in February lasc I saud that "shareholders were aware that the Association now held a number of properties, amounting to £19,357, which have been taken over at various times, besides others amounting to 4J25.302V which although pot actually taken over, are worked by the Association. Up to the present we have been unable to realise these properties at satisfactory rates, and it is possible that on some of them at least there may be a deficiency. It is to meet such a contingency that we propose to carry forward the balance before mentioned with the hope of increasing it annually. All these securities were taken before last meeting, and most of them some years since,' when values of properties were very much higher than of late, and appeared to justify the advances made. These properties now return income amounting to over 3 per cent, on the capital they represent, and the Directors hope and expect that if there is eiven a gradual and judicious realisation no material loss wiil result, but they submit that, considering th'i amount represented by these properties, the whole earnings of the Association should not be distributed as dividends until the working out can be more definitely ascertained." Since then the Directors have personally made a very minute enquiry into every security In which the Association is interested, and have made 1 considerable reductions in. the values thereof, so considerable that I think if the value of the property in the colony is to remain even as low as it is at present, it is improbable we shall lose anything more; indeed, I anticipate that when realised they will show a considerable advance. I do not say that at present we could sell at much profit, if any, nor do I think it would be prudent to attempt) realisation now. The total amount written down in round numbers is £17,823, and this, of course, has to be provided for. Tne main reason, then, for calling you- together to-nigbt is that, instead of the Directors paying a dividend on the 31st December as usual, you should ■have an opportunity of considering the advisability or propriety of two alternatives, either to accept a less dividend for a time, so as to restore a fund to meet deficiencies, or to reduce the capital by the amount written down. For my part, and ray colleagues agree with mc, 1 think the latter course would be inadvisable, and do not recommend you to follow it. The former plan seems to us more advisable. The above, of course, affects more'particularly tbe capital shares, as they are bound to rerattiu. It seems to mc the better plan as regards the "B" shares would be to credit them with the same interest to 31sc December as shall be paid on the " A" shares, and deduct from tnem their proportion of the deficiency, and either pay them out at the reduced value or allow them to accumulate at tbe option of the holders, crediting them wich the annual profit until they would become terminable. My opinion is that the former course would aim the investors best, as by the iatter they would still be liable for any deficiency, if any, which might arise by revaluations. Iα 1887 the Association was incorporated under the Building Societies Ace, and a special meeting adopted rules by which 10,000 capital shares were to issued, bo that by January, 1878, 7771 shares at £10, £77,710; January, 1871), £229 shares at *10, £&,zHO, or £100,000 capital, was paid up. Now, after about twelve years, ana after making full allowance for (depreciation of securities, the capital account appears thus—lo,ooo sbares at £10, £100,01)0; estimated depieciation* £12,770, after charging to B shares their proportion, or equal tol per cent., after having paid over 8 percent, per annum for full period. The foregoing is the very worst position in whicn the matter can be shown, for the depreciation extends over the whole period, during rWhicn the-- Association has invested '£766,380, and this depreciation is a very small matter indeed, when the immense iyplume of business is considered. Sharenolders will remember that in 1880 they . determined to divide the reserve ; fund, which had then accumulated, a proceeding which no doubt was imprudent, especially by the light in which we now look at it. Those gentlemen, who were then members, and .are still so, have of course not lost by the transaction, as they have had tbeir share of the reserve and good interest ever since, and those who have bought in since have done so with a full knowledge of the facts, as Btated. Had we gone on . with the reserve fund at the rate it was accumulating we should now have had more in hand than would have provided for the present depreciation. I think, therefore, the amount is hot large, and that there is no cause for anxiety. I venture to think that no institution of the sort has been carried on more successfully in the colony, the only blot being the dissipation of the reserve, which should have been kept for a contingency, which experience taught us ie liable sooner or later to take place, and indeed has taken place, owing to the great depreasion-in property from which the Association has no control. It seems then inadvisable to/reduce the capital, which in the endjpay-not be warranted if the causes arejpajur removed,: which I do not tiiink any very great stretch of to foresee, if the resources of ihi'cipilon&ire' properly developed. The losses up to the present to revenue already accrued, fjnd will appear in the balance-sheet;! j'wnich shows a credit balance for:se;y|at' of about £9428, which would were appropriated, pay a 6J per cent;., besides £1300 already;yfrltteu off, making a total of about for the year. The Director*, iri/yi&vv of the fact chat it is not proposed to pay. the usual dividend on 31st December, thought it desirable to call you and to place before you a full account of the position of the Society as it exists at the present. The Directors will bring down at the annual meeting in February next proposals which we trust will be satisfactory, and receive your favorable consideration. I may say that we have no resolutions to propose, because they will be brought down atithe annual meeting in February, so that between now and then you will have full time for consideration and you will be able to understand and argue the resolutions which would then come down. All the Directors approve of the statement, but if there is any further information that any gentleman wishes to learn .the Directors will be only too pleased to supply it. I leave the matter here in the hands of the shareholders. The Hon. C J. Stevens said that at at the last annual meeting he was rather expected to make a few remarks as he had come on the Board under unusual circumstances. He /referred to the £45,000 mentioned in the Chairman's remarks, part, of which had been taken: over and part of which had to be practically taken over. If it were thought that he should say something then, he would do so in regard to the Association generally. He Jiad nothinf&o say by way of dissent to the.remarks which had been made by the Chair* man. The statement bad been most carefully prepared, and it had the complete assent of the Directors as a whole. Let him say that most of the depreciation which had been arrived at had been come toby a very exhaustive process of examination of tne securities. The Directors had given great attention and consideration to each security, it was therefore fair he thought to assume that they, were on what/ might be called the bedrock of the affair, and if ~ it turned out no better than bad been placed before them, it would amount to a depreciation of about 12J per cent, on the amount of capital paid up. The only other point he wished to call attention to was this. It appeared to him that when an unsatisfactory state of things in regard to a financial institution is declared, it assumed somewhat of a panic which might be calculated to do more or less harm. The Directors had reason to believe that what tbey had represented was the worst of the business, and he would call the attention of the shareholders to the fact tbe depreciation was a measurable tuins;— they had measured it—and that the state of the institution financially—after making that allowance--was certainly very Rood. He invited the attention of the shareholders to this important consideration— the credit of the institution stood absolutely unimpaired. The only matter was that they were & little poorer, but as far as concerned the mercantile world the Association was as strong as before. \ In answer, to a question from Mr Meeson, the Chaiomax said that it had been intended to propose a resolution. There was fonnd to be a legal difficulty in the way, so that it could not be done and

Instead of etopping the meeting, ifc was agreed to bring the shareholder* together to explain matters,; That was how it happened that the meeting bad merely received the statement, and that the question of the balance-sheet or the dividend was not considered. : The proceedings shortly after terminated. ' •• "