THE FARM INDUSTRY

Dominion, Volume 2, Issue 604, 6 September 1909, Page 10

THE FARM INDUSTRY

■ ♦— RECKLESS TRADING. LOVELL AND CHRISTMAS AS CRITICS. ' WHO SPOILED THE PKODUGE MARKET? vAt tho fourteenth , annual meeting of shiirohoWers of Lpvcl! and Christmas, Ltd., held- in London on July 16, tho chairman, Mr. C. Lovoll, said that while ho thought tho proposed half-year's dividend, at tho rato of 6 por cent, per annum on preference shares and 8 per cent, on ordinary shares, making 7 per cent., for tlio year, was not A result to do ashamed of, yot it ■ was not altogether satisfactory to the directors, who' had.hoped to be able to'show a'better result. The past year, however, , had been one of almost unexampled; difficulty ill the; provision trado. Those gentlemen present who- wero engaged in that business would know' that this was absolutely correct. A year ago the directors had hoped that the; period ot reckless trading was nearly -over, but that had not proved to bb the'case, and profit-, making during the,-past year probably had boen moro difficult than at l.any'- previous period. High prices in- the colonies had to bo paid to procure tho usual supplies, and when those goods cume to hand in many in.stances tho prices realised did not cover tho actual ■■ cost. .

■ '. ■ A Failure and its Sequel. Well, the contracts for these supplies had hardly been concluded when a failure too':: place in Britain of a largo company that was doing an important business, and possibly that company was responsible to a very great extent for the high prices that had to be paid in the colonies for the goods. At any rato,in their fall they.brought down others, and during the time that tho liquidation was' going on it was almost: impossible •to sell goods in London at a profit. If was still worse in the north. There (continued Mr. Lovcll), in order to hold your customers, you had actually sell, at a loss; and this continued for some - considerable time. . One large, .store—Bell's Stores—was' indebted to .the company that failed to the tune of some £40,000. : Thoy were unable to meet their engagements, and,, of, courso, they wore brought into ..liquidation; arid at a time whflfl apparently they, wero ; about to recover thoi , - position. .■■Wβ,. in'common with others, had supplied these .stores for a great many years, and. w> 'suffered a-considerable loss.''. What; I should jtcnn o«r general bad debts duriii" the year"havobeeu, as usual, covered out of. tboi profits of the year, but with regard to Bell's Stores we' have taken the loss and':the depreciations on some of the investments out of the debt reserve fund. Speaking of that rescryp fund, ,and going back to tho year 1896, when tho original business of Lovell ,and Christmas was. handed over to tho com- , pony, there was. a reservo of somo- £8600. During the years that have passed that fund has been augmented, until in, tho accounts of_ ls.st year •it :stood at something .over £ul,oooi AVe have always looked upon this us vsomowhat in • tho light. of. an insurance fund against- any contingency that might arise,. such -aa has'•.avisen- now, aiJ, tlierefore, ;wo think'that it would have been, unjust in this ono yoat to have deprived the sharoholderaof a dividend when we had that fund in existence. In fact, I'- take it that there, would, have been no reason for. such a fuud if wo' could not uso it on.such an occasioii/as this. . .-■■'." '.■'■ ,

' ■'. V Increased Trading Profits. ■: . (The figures In the accounts will show you that the trading profits for 'tho year are some- £1800 moro,',than- last" year; Horses, carts and vaais have increased somewhat, but :wo are now-beginning to use motors,':and-we had .'to : .increase', our stable,, accommodation and provide more horses. All those articles aro written*down to, I.might almost-say, : an absurdly low figure^—certainly to', an- amount far less than thoy. would realise if 601 d.' Stock-in-trr.dc is Bonio£7ooo or £8000 moro than last year, and'meat of that stocli—which I may say, in passing has all'been written down,to the.,lowest market value—was. Leldin the north in articles that London .deal so much in. Our northern branches havo to hold larger;stocks, because thoy deal .iii various sundries' which' we. dp not -touch ■in London. Book dobts are- ; only : ;£l000;n\pro, :than last year, while tho inve'atmonts' , aro' ii'earlv: £12,000 more. , I think I should liko to ■ .explain to you that tho investments there,mentioned consist principally of debentures" that ■■yo.'hold as a first charge upon somo butter faotories. in the Argentine. . -AVo sell their goods, and those debentures are redeemable at fi ; om £1000 to £2000 each year. As long as \we hold any debentures in-those companies wo have the sale of their- produce, and'we havo received orio instalment since ■this l meeting was called on account,of thoso debentures, which nre to be paid off annually. Cash ill hand is some £25,000 moro than last.year. ; ■:::•.- :.;., ■(■:■■■■ -; ■ ..;v '.-•.

■;; ■-' Speculators Stepped in. .. I spoko a few minutes' ago about the prices that were paid: for 'goods in New Zealand and the prices 'here. ;It will explain to you, perhaps, the difficulties we have had to encounter when.l toll you that when the contracts wero being made in August and September of-.last,.-year speculators-stepped in,. and to a groat extent ,1 spoiled theso of us who are in the. :rcguiar business, our, competitors, paid as much aslljd. and lljd. for the.butter in the factories, and- when that butter arrived.here in tho full swing of.the business in ' the : first, three months of the year it was being, sold in London at less than tho actual , cost\befortf it. left the factories in New Zealand. V , Very ,, much tho samo, thing, occurred with regard to clieose. I merely mention these things to to under-, dtarid- the difficulties we' have- had to. encounter during tho past year. ~;' '~,, . The pleasantest thing I can speak to you about is tho very large increase that.has been made in the volume of our business. Wo have had a bigger increase in tlio past twelve •months than in any previous- period,, and if wo had realised anything like a fair-percent-age of profit •Wβ should easily, have shown you from £10,000 to;£15,000 moro not profit; but the adverse circumstances-I have told you of to a very largo, extent spoiled us. . .; , Money-Making Was Hard Work..-. . ■ But whatever, may he the result shown in the balance-sheet I.niay, tell yoii that money (was nev.er more hardly worked for than it has been in the'last twelve months." . Speaking about -the reserve and investments I wish to be quite'candid with' you—all.those investments are, not. written down to tho very: lowest rock bottom, but they are paying, and during,tho past year they returned to us—a good many of .them are debentures '— 4J_ per cent., and may yet recover their original value. Oar accountants advise us that tho reserves we have are ampleto cover any deficiency. You will notico we propose to carry forward £28,867. You will, of course, notice, that' , the directors''remuneration amounts to nothing.unless we pay you 3 per cent., and as we did not feel that we were/justified under the circumstances in' paying that;B; per cent., the matter is'in your hands. ' '■ •■( "•... ;■ ..- .> \'' ,-s . The Outlook. .. You might ask me, perhaps, to say'something ivith regard to tho future., Well, I do not lilio to prophesy in these times. I can /only tell you that we consider that we have a splendid business, and that we havo retained the full confidence of our customers —never more so; and, further, there. , is ono feature in tlio : business, that prices look like being lower during tho coining season than in the past two or three years, arid I feel pretty confident myself that tho mad spirit of com--petition which has been prevailing for several yoars . has. received, .a . very severe, set-back during the last twelvemonths. I am hopeful, as I was last year, but I do riot: like* to say too much on the point. Mr. C. E. Nuthall said he was sorry that thoso who sold goods at a loss and did themselves and the trade an injury did not join 'together or arrange between themselves to sell at some sort of profit. Selling at a lots seemed to bo very unbusinesslike.' , The chairman, in reply to questions, stated that the amount taken from tho debt reserve fund was between £23,000 and £30,000. Directors of New Zealand dairy factories, who are plodding .along on a modest 10s. a day (with idle time knocked off) will bo interested to learn that shareholders voted , tho Lovell and Christmas directors the tidy ami) of £3000.1 ■.••.. ; ; '