N.Z. REFRIGERATING COMPANY, LTD.

Press, Volume LXXXV, Issue 25737, 24 February 1949, Page 8

N.Z. REFRIGERATING COMPANY, LTD.

SHAREHOLDERS’ ANNUAL MEETING

CHAIRMAN’S REVIEW OF OPERATIONS

The sixty-first annual general meeting of shareholders of the New Zealand Refrigerating Company, Ltd., was held at the company’s offices, 159 Hereford street, Christchurch, yesterday, Mr W. H. E. Flint, chairman of directors, presiding. The secretary having read the notice and the auditors’ certificate on the bal-aneq-sheet and the minutes of the previous annual general meeting of shareholders having been confirmed, the chairman

“Our balance-sheet again presents no unusual features, and, bearing in mind the ever-increasing costs and the continuance of a high rate of taxation, you will not be surprised at the slightly smaller profit this year. The volume of stock handled through our five works showed a small increase in numbers, but, owing to the climatic conditions, the carcase weights were lighter. You will s , ee . that the directors recommend, a dividend at the same rate as last; year (7J per cent.), which will absorb £47,783 ss, and that £23,000 be added to the reserve for £ e rene wals, and extensions of buildings and plant, leaving an amount ot , £48,114 8s Id to be carried forward, which compares with £49,100 6s 9d a year ago. Laud, buildings, and plant have been written down at the rates allowed for income tax purposes, and now appear in the balance-sheet at £320,731 10s Id. Expenditure on new buildings and plant amounting to £22,813 16s 8d has been charged to the reserve for rebuilding, renewals, and extensions of buildings and plant.

Last year an extension of the manure ana tallow building at Burnside was comP.. , r anc * an addition of a ground level sticking pen was also made to the slaughterhouse at that works. These buildings are now in use, and, given an ? de ,9,¥? te supply of labour, the additional facilities will enable a further increase in the volume of stock that can be handled. This year we propose to erect a new cold store and freezing chambers at Picton, which, when completed, will enable much-needed repairs to the existing building to be undertaken. The new building, and the repair of the present store, will provide a valuable addition to the refrigerating space at Picton works. “A breakdown of the freezing plant icton ’. which occurred on January . necessitated a discontinuance of killing operations and the clearance of the frozen meat stores were particularly unfortunate in losing the use of two large compressors, both of which broke down within 10 days and are beyond repair. New plant, which has been on order from England for nearly three years, is now on the way out, and we were fortunate in bcmg able to secure sufficient plant in New Zealand to permit of killing operations being resumed on February 14. We are indebted to the overseas shipping companies and the Railway Department for their helpful co-operation. Most excellent service has been given and long hours worked by our engineering staff and the employees at Picton in erecting 1 ®. P lant - 1 wish to emphasise that had it not been for the war, the replacement of the old plant would have been accomplished long before this. “As mentioned last year, the age of some of our buildings and items of plant is such that heavy expenditure is required on renewals and replacements, which cannot be undertaken at present owing to J shortage of materials. This poses a difficult problem for companies such as ours, faced with rising prices for replacements, and heavier costs in having to use old buildings and ageing plant. Each year sees some new item added to the schedule of work to be undertaken when conditions permit, and, in the circumstances, we have added a further £ 10,000 to the internal provisions to meet such costs. These provisions now amount in total to £195,052, and, as you will see from the righthand side of the balancesheet, £173,000 of this sum has been accumulated on deposit with the Government for deferred repairs. “The high cost of replacing plant and buildings is a problem for industry both here and overseas and, while tax continues to absorb such a large proportion o f Uie profits, there is little chance of building up reserves adequate to meet these inflated costs. It has become increasingly evident that money set aside out of past earnings to meet the cost of needed replacements and development has been rendered inadequate. Tax is assessed after allowing modest rates of depreciation based on the original cost of buildings and plant, which to replace now would involve considerably increased ex-' penditure. Although provision has been made in the Income Tax Act for special rates of depreciation on new capital expenditure, this concession is of little value while materials are so difficult to obtain. As the public revenue is buoyant, would it not be of more assistance to industry to increase the allowance for depreciation on the existing buildings and plant, and thus permit the creation of reserves to meet a larger part of the cost of replacements? “A matter which is causing your board some concern is an encroachment of the sea at Smithfield. About three acres of our land has been eroded and the sea has reached. to wjthin 100 yards of the water storage ponds. The problem has been under discussion for some time with the Government and the local authority concerned, with a view to the erection of protective works. We regard .the matter as one of national importance; the erosion is not limited to the Smithfield area but affects the land both north and south of our property. "As a result of the revalution of New Zealand currency to parity with sterling, V? e ," < ? ok value of our investment in the English subsidiaries has been correspondingly reduced. As mentioned a few years ago, we have an internal currency reserve, and the cost of writing down the investments has been charged to this reserve. It will be appreciated that the removal overnight of the 25 per cent, exchange was a matter of great importance to a company such as ours, and the consequences could have been serious. You will be pleased to hear, therefore, that we had covered this risk by forward sales of exchange on the bulk of the stock awaiting shipment overseas, and also gained by the prior transfer of funds from the United Kingdom. As a result of this transfer, the cost of writing down, the English investments has been offset by this action, and the internal provision remains at approximately the same figure as previously.

"Consignments unrealised and stocks in works figure in the balance-sheet at £ 206,826.6 s Bd, a considerable reduction on last year. Advantage was taken of the good demand for wool to clear the bulk of the stocks which are in much smaller compass than usual under normal trading conditions. “The high prices now ruling for wool present a problem to buyers of fat stock, who have to take the risk of the market for lengthy periods. In our case thewrisk at times runs into big figures, and we can only hope that any recession in prices will be gradual. As I mentioned a year ago, it has always been our policy to handle our finances so as to cushion as far as possible the effect of market fluctuations. “Since we last met, a contract has been made between the United Kingdom and the New Zealand Governments for the purchase of all New Zealand’s exportable surplus of mutton, lamb, and beef up to 1965. This extension of the bulk purchase contract brings the period for which meat supplies are controlled to 16 years. There can be no difference of opinion as to the necessity for control while the ration in England is such a meagre one. It is, however. vitally important to the producers of this country that the distribution of our meat in England should be entrusted to the trade at the earliest possible date even if only acting as agents for the British Government. At the present time the consumer has to take whatever meat is offered and has no choice. The time will come, however, when the British housewife will again have the right of selection, and our New Zealand brands will have to meet the competition of the Argentine and other countries. In the meantime, the men who were trained to push the sale of New Zealand meat are rusting in England, most of them having been absorbed by the importing and distributing organisations set up by the British Government on the outbreak of war If the meat trade were permitted to take over the functions of these organisations on a commission basis while control continues. it would enable those New Zealand companies, such as ours, with their own distributing outlets, to rebuild their selling organisations and be ready for the dav when normal trading conditions are resumed.

“In this connexion, our own subsidiary Towers and Company, dealt with from 6000 to 7000 retailers in the United Kingdom before the war, and concentrated on the sale of New Zealand lamb as against competing supplies from other countries. The importance to New Zealand of a New Zea-land-owned company with its own distributing organisations in England, distributing direct to the retailers, cannot be overemphasised.

“The producers of this country can be justly proud of their achievement in increasing the supply of meat for Britain despite shortages of labour and fertiliser. As the ration G-f meat in England is now down to the annual rate of 771 b per head of the population, which is about 40 per cent, below pre-war, it would seem that there should be an asstired market in England for our meat for some years to come. This does not mean, however, that, the standard of quality can be allowed to slip, and it is realised that it is just as important as ever that the reputation and goodwill of our brands be retained. In the 10-year period from 1938 to 1947 inclusive, imports of mutton, lamb, and beef into the United Kingdom from New Zealand show an increase of 83,000 tons, while in the same period imports from Australia fell by 54,000 tons. Imports from South America of mutton and lamb rose by 55,000 tons, but this was offset by a decrease of 132,000 tons in beef. Last year New Zealand supplied about 40 per cent, of the total imports of these three classes of meat into the United Kingdom, and 66 per cent, of the mutton and lamb.

“The efforts now being made in the United Kingdom to bridge the gap between imports and exports and to lessen

the drain on gold reserves must command the interest and sympathy of all rightthinking people. For us in New Zealand the outcome of the struggle has a special interest, as Britain is our only worthwhile customer for most of our primary products and her success in making ends meet will ultimately be reflected in our own standard of living. The hardships which the people of Britain are enduring at the present time are in our interests as well as theirs, and we should ask ourselves whether there is any way, apart from increasing the production of food, by which we can help. 0 ‘‘You will note from the balance-sheet that no dividends have again been taken from our English subsidiaries, of whom there are now three. Towers’s operations are practically suspended, but Mr Martin, whose health I am glad to say is no-w fully restored, takes an active interest in all matters affecting the importation and distribution of meat on behalf of the British Government. Messrs G. B. Field, and Company, under Mr Rafferty's able management, is a valuable outlet for our sheep and lamb casings. The fiiird subsidiary is the new company registered in England under the name of ’The New Zealand Refrigerating Company (London), Ltd,’ to which I referred last year. In view of the size of our interests in England, and in readiness for the time when we shall be trading more actively in that part of the world, it is the intention of x the board to send some of the younger men on the staff overseas as and when opportunity offers. The experience which they will gain, and the contacts which they will make, will be of great value to the company in the years to come.

"Although the number of men available for work in the freezing industry was adequate last year, there was at times a shortage of trained slaughtermen. I would again pay tribute to the work which has been done and to the good spirit which prevailed. "Our thanks are again due to the members of the Wanganui advisory committee presided over by our director, Mr Glenn. The members of the committee take a keen interest in all matters affecting the company’s business in the North Island. You will wish Mr Glenn to express on our behalf appreciation of the services of the committee. We are also indebted to the members of the Marlborough producers’ committee for their full co-opera-tion. Their activities have been most helpful in promoting harmonious relations between the producers of the district and the works’ management and buying staff. “You will expect me to say something in regard to the prospects for the coming season. The lambing, particularly in the South Island, was good, but the continued dry weather in Canterbury and Otago is causing some anxiety and there may be a shortage of feed in the autumn and winter months. Apart from possible fluctuations in market values, which are unpredictable, present indications are for a satisfactory season if good rains fall shortly in the principal fattening areas in the South Island.

“The directors greatly regret the loss of Mr Campbell, whose death is referred to in their report. Mr Campbell’s long service in the industry and with this company had provided him with a very comprehensive knowledge of the business both here and overseas, and others as well as ourselves will miss the benefit of his experience and ability. Mr A. Grandi has been appointed general manager to fill the vacancy, Mr S. Dickson is now manager for New Zealand, and Mr H. Cordery is secretary.

‘ Sir Henry Turner paid us a welcome but flying visit of only a few days last April; he continues as Meat Controller for the British Government. “On behalf of the board I would record their appreciation of the good work done by the management and staffs for the last. year. A high standard of efficiency has been maintained throughout. This applies to both the New Zealand and British offices and works; the business is not easy; conditions are abnormal and we desire to express thanks to all members of the organisation.”

The chairman then formally moved the adoption of the report and balance-sheet. This was seconded by Mr C. P. Agar, and on being put to the meeting was carried unanimously.

The directors .retiring In accordance with the articles were Messrs W. H E Flint and C. P. Agar, and, in the absence

of any other nominations, they were reelected. On the motion of Mr P Agar, seconded by, Mr A. Anderson. Messrs J.-W. K. Lawrence and W. H. Nicholls were appointed auditors until the next annual general meeting at the same remuneration as last year. A vote of thanks to the directors, management. and staff In New Zealand and England was proposed by Mr P. Agar, seconded by Mr A. Bretherton and carried unanimously, and the meeting then terminated. (Extended report by arrangement)