CHAIRMAN'S STATEMENT.

Evening Post, Volume CI, Issue 51, 1 March 1921, Page 10

CHAIRMAN'S STATEMENT.

The Chairman (Mr. Knight), addressing the meeting; '«aid : —

Gentlemen,—The accounts for last year have now been in. your' hands for some time and, subject to your permission, I propoae to follow onr usual custom and take the report and balancesheet as read. .

1 am glad once more to ■be able to congratulate shareholders on the position of the company and the results achieved, .particularly as the year just closed has m many respects been one of the most remarkable commercial periods ever experienced. In my remarks at our ' last annual meeting, ■when dealing with the accounts of the 1919 season, I stated that it could hardly bo expected that such favourable conditions as we had experienced for that year could be permanently maintained. The conditions .which, we have had to face during this last- year, and more particularly during the last, five or six months, have shown very clearly that there was every reason, when we last met, for viewing the future with a certain amount of caution. Probably few outside those responsible for the conduct of such a busiivsss as this are quite in a position to realise the' unprecedented downward movement which has chai'acterised the . markets for most of our main products. As compared with the realisable prices current up to June.or July of last year, ■ values of -wool, edible fats, tallow, preserved meats, pelts, etc., have all collapsed, and that to such an extent that the values now'obtainable for practically each and all of these, our main sheep products, are from 50 per cent, to 75 per cent, lower than they -were a very few months ago. In th« conduct of the operatione of th« company during laet season, every opportunity was token to realise aepromptly as possible onr holding of these various lines, and, on the whole, the management was- particularly successful in effecting most substantial, clearances before * the downward movement had become so definitely established that business .in many lines was -practically brought to a complete standstil. I have thought it well to draw attention briefly to these extraordinary conditions as, while the company has had —in spite of that—-a successful year, the earnings naturally, show a shrinkage as compared with those of the 1919 season, Whilst this is so, I think shareholders have much reason for congratulation that the company's affairs are in jruch a strong and sound position, as revealed by the accounts now presented. Before. I deal in detail with the accounts, I wish to make a very few remaTks as to the conditions now facing us for the conduct of the current year's business. When we last met, twelve months ago, it was anticipated that v/e might still be Mding very heavy stocks of Government meat at this time, and fears were naturally expressed as to th« difficulties of commencing private trading under Sioh anticipated circumstances. The past year, has proved somewhat of a surprise, so far as meat is concerned, as not only did the congestion on the London market relieve itself much more quickly than -anticipated, but the supply of shipping to the Dominion- also proved greater than expected. The last few months particularly of 1920 saw such heavy clearances of the long-held • Government stocks, that we are resuming free business in meat under much more favourable conditions than..it on-£> time appeared possible. During the second half of the season ,yery largo, shipments were-made by -the* Government to America, raid considerably "over two million' carcases of lamb were r.old by the Government to that market. On the whole, this lamb-seems to have made a very fay-

wool—a minimum of .15 cents up to 20 cents (or even more) per lb has been suggested, and it does not, therefore, look as if we could expect much material relief from that particular outlet. Tho greatly increased costs of .working, wool and the higher freights now ruling, further accentuate an already grave position, and to such an .extent that it is quite conceivable that; some of the lower grades of coarse wool may hardly be worth the costs of preparation and shipment. Tiiis unprecedented congestion of stocks of wool is, unfortunately, accompanied by probably the moet serious fall in pelt values which the trade has ever experienced. On to-day's markets the pelt from each lamb killed throughout New Zealand has depreciated, as compared ' with last season, anything from 4s to 5s each, whilst sheep pelts have meanwhile depreciated even more. A general survey of the position would hardly be complete without referring briefly also to the change, within the last few months, in the values of fate, both edible and inedible. The successful realisation of this particular product is of great importance, to all freezing companies, and, under to-day's conditions, itis impossible to gauge the future with any confidence. So, far as our edible fats are concerned,- in (the past they have found , their market almost entirely on the Continent. Tbei'e is no doubt that the demand is etill there, but the allimportant question of payment, is still the stumbling block. Were international credits arranged for tho relief of the starving countries o£ Europe, there is little'doubt but that our edible fate would be readily—in fact almost greedily —absorbed; but, unless something of that sort is done, it is impossible at the moment to count upon the Continent to anything like its full extent as an outlet for this particular product. The same applies, to a. certain extent, to our nonedible fat productions.

I- Values for freezing stock, under such conditions, could not. naturally, be "maintained at anything like the rates •still current were it not that the demand for our meat, in. spite of the uncertainties surrounding the conditions t under which it will be maVketed, lias up to the present been characterised by !u fairly confident tone and at valuesi-wnich, if maintained, would help to compensate for the reduced value of the wool, pelt, and other by-products. In view, howover, of the ' now world-wide tendency for values of all products to depreciate from the abnormal level reached under war conditions, it is difficult to justify the belief that meat especially -will be immune from tho general downward tendency. The great dietaffce of New Zealand from its final market, a.nd the present scarcity of refrigerated tonnage sufficiently close af hand to ensure- prompt shipment, both emphasise the great uncertainty' as to tho stability of today's stock values, and it is, I think, fairly .evident that there is much room for avery material readjustment. Whilst I have briefly-outlined the extraordinary conditions surrounding our return to normal trade, I do not wish to appear in any way pessimistic, but I think it only right that you should know that the transition from war conditions and Government control back to ordinary unrestricted trade is being attended with many special complexities, and he would be 'a bold man, and, if I may venture to say so, a. very unwise 0110, who would attempt to prophesy as to what the coming, year lias in store. We, as a compuny, however, are particularly fortunate in being very clear, of dependencies of unknown value, and the strong 'position, as shown by the .balance-sheet in your hands, is, I think, ample evidence that we are in a most excellent position to face the future with every reasonable -confidence.

Our buameßß in particular, and tho

I think, materially strengthen tho general position at these points, and help us to ensure reasonable safety and responsible supervision. The next item shows a very large reduction as compared with the previous year. A comparison of the figures shows tliat the stocks of meat held by the company on account of the Imperial Government were £460,373 0s 4d, whilst twelve months ago they stood at no less than £909,577 8s Id. Against our holding of Government meat wo have received advances amounting to £344,999 4s lOd, leaving £115,373 15s 6d due to us on shipment, as against a balance a year ago of £240,394 12s 4d. ■The next item, sundry debtors, investments, consignments unrealised, and stocks in works, stands at> £418,791 10s Bd, while last year we held only £268,----358 13s 4d. There is thus in these figures the very considerable increase of practically £150,000. This is largely due to a very satisfactory increase in our NewZealand fertiliser business, necessitating tho holding of much larger stocks are, however, very liquid), and to the nacessary holding of. various other largo items essential for the present year's business.

Particular attention has been paid to the valuations comprised in this important total, and, in view of the great uncertainties surrounding the conduct of commercial affairs at the present time, a very conservative valuation has been placed on all dependencies, and I am confident that, considering all the abnormal considerations now obtaining, this policy will meet with your complete approval. The profit and loss account shows a balance available for appropriation of £101,561 11s, which the directors reefcmmend should be disposed of as follows : £ S. d.

To ptf a dividend of Is 3d per share on 300,000 fully paid shares, and of 7id per share on 600,000 shares, 10s paid 37,500 0 0 'Sm place to the reserve account 20,000 0 0 IJeaVing an amount to carry forward of 44,061 11 0 £101,561 11 0

You will notice that the proposed distribution, together with the interim dividend, corresponds with ,the amount distributed during the previous year. Before closing, I would like to draw your attention to the extraordinary burden which is being thrown .on joint stock companies by the present method of collecting income tax. The position has been further accentuated since wo last met by the unexpected increase- in th rates of taxation. The tax has now grown to a rate which practically places the Government in the position of a full partner, with preferential claims on the profits, without, however, any corresponding responsibility for the losses, ft will be apparent to shareholders what a handicap is imposed on industrial enterprise- when I inform you that tho company's income tax and local rates taken together absorb practically one-half of the income earned during the financial year. To put it in another way, practically only 50 per cant.'of the income of any large enterprise is now available as a fund from which the capital employed can draw its return.

It is to be hoped that the Government will realise that such a crushing burden must, if long continued, stifle all enterprise, and that it will afford substantial relief as soon as it finds itself in a position to do so. It is difficult to see how any progress can be made, or real prosperity maintained, under such conditions as now exist.

Lnst year special steps were taken to authorise the company to initiate a. scheme £or the crentiou of it provident, and endowment fund, and it was then

I think it was the Dnnedin, with 4000 sheep, and we now find that the Dominion's freezing business has grown to something like seven '■ million sheep a year. Mr. Mill then seconded the adoption of the report and balance-sheet, which was carried unanimously. ELECTION OF OFFICERS. Mr. H. A. Knight, who retired by rotation, was unanimously re-elected a director. Mr. Bloxam proposed that Mr. J. W. K. Lawrence be again elected auditor. This was seconded by Mr. G-. G. Aitken and carried. VOTE OF THANKS. Mr. W. H. Clark moved a hearty vote of thanks to the directors and staff for the able manner in which they had carried on the business of the company. This was seconded by Mr. John Mill and carried unanimously. The chairman responded for the directors, and Sir Francis Boys briefly acknowledged the vote of thanks on behalf of the staff. The meeting then terminated. [Extended report published by arrangement.]