COMPANY MEETING

Evening Post, Volume CXXV, Issue 122, 26 May 1938, Page 11

COMPANY MEETING

EQUITABLE BUILDING

FINAL DIVIDEND DECLARED

Shareholders of the Equitable Building and Investment Company of Wellington, Ltd., met today for the sixtieth annual general meeting of the company, over which the chairman and managing director, Mr. Malcolm Fraser, C.V.0., M.8.E., presided. Associated with him were two of the directors, Messrs. E. R. Dymock and R. P. Stewart, the third, Mr. Jacob McEldowney, being absent from New Zealand.

A final dividend of 2 per cent, was declared, making the rate for the 15 months reviewed by the report 4 4-5 per cent.

"On this occasion we celebrate the diamond jubilee of the company," said the chairman (Mr. Malcolm Fraser). "For over sixty years the company has carried on business in this city, and has shared in the" many economic ups and downs through.which the city has passed. ' Although many of the stalwarts of the. company- who have directed its affairs have passed on, it remains, a testimony to their care and foresight. , We acknowledge and record our grateful tribute to. the fine work of those who have preceded us, and''who through the years built up such ; a (Strong financial position as enables us in these trying times _ to carry on and , pay satisfactory dividends." INCOME TAXATION. The chairman, referring to income tax law, said the "annual balance date for the company, with the written consent and approval of the Commissioner of Taxes, has been altered from December 31 ; tp March 31,. and the accounts now presented are for a period of fifteen months, January 1, 1937, to March 31, 1938. When this alteration was decided on at our last annual meeting, the amendment passed last session to the Land and Income Assessment Act affecting alterations of balance dates was not anticipated. The result of this amendment now is that this company will be called upon to pay income tax for three months longer than income tax has been in force in the Dominion." '■ Business had continued active during the period under review, said the chairman. New deposits to the amount of £32,227 were received, while deposits amounting to £32,177 were repaid, and deposits totalling £43,072 were renewed. Twelve mortgages i totalling £11,468 16s lid were repaid; and 39 new loans aggregating £26,915 were made, while 89 mortgages totalling £112,062 3s 5d were renewed for further terms—ample evidence of the activity in the company's business. There had been no lack of applications for advances and those made were mainly in respect of new dwellings; the average loan made was £690. HAMPERED BY LEGISLATION. "As a result of action by Mortgagors' Adjustment Commissions, and in the continued endeavour to improve the position of unsatisfactory securities, said Mr. Fraser, "the titles for twelve properties on which £10,832 3s 9d was outstanding came into the company s name. Sixteen properties in the company's name were sold for a total of £17,756 0s Bd.

"Action by the company In disposing: of properties coming into its ownership is much hampered by the operation of the incorrectly styled "Fair Bents Act," which prevented sales being made because possession cannot be obtained and given. As fast as properties owned by the company are vacated sales are being effected.

"The amount secured on farm properties has been further reduced and now stands at £34,844. Of that sum £32,234 is well secured and for the balance, £2610, provision for any loss which may result has been made in the depreciation reserve. "In dealing with applications for new advances and with mortgages being renewed, the policy is being steadily pursued of placing as manjras possible on a system of fixed monthly payments suitable to the circumstances of the mortgagor, covering both, interest and principal; 53.09 per cent, m number and 51.73 per cent, in value of the company's mortgages are now on this basis; .'='.■' INCOME AND PROFIT. "The gross income (£24,428 0s 8d) transferred to profit and loss account is equal to 4.95 per cent, per annum on the average of the mortgage and property assets at beginning and end of period. This represents a very ! small increase of 0.08 per cent, on the yield of the previous year, but in view of the decline in interest rates it must be regarded as satisfactory. The net profit before providing for reserves was £11,426 17s lid. Applying this net profit to the paid-up capital of the company (£86,380) it represents on an annual basis 10.58 per cent, as against 10.95 per cent, in the previous year; a small decline due mainly to the increased expenses which had to be met during the period. ~,.„■ The cost of management, including directors' and auditors' fees, was 12.39 per cent, of the gross income and 0.615 per, cent, of the average of mortgage and property assets at beginning and end of period. The increase in cost of management for the period is almost entirely due to costs for the revision [of the constitution, approved at last annual meeting, and expenses, valuations, etc., in connection with mortgages dealt with by the Adjustment Commission, all of which are nonrecurrent. * No further additions to depreciation reserve are proposed; the amounts written off during the period totalled £2005 10s." The arrangement for deposit guarantee with the New Zealand Insurance Company continues, the chairman added, stating that it was a most valuable asset to this company, placing it 'beyond the possibility of danger from undue deposit withdrawals, and making it unnecessary to hold liquid assets to meet such a position. "I would again repeat," the chairman continued, "that no investment in New Zealand today is safer or more secure than a deposit ■ with the Equitable Building and Investment Company backed by this guarantee. Our relations with the New Zealand Insurance Company are on the best footing and the courtesies and. consideration always received are gratefully acknowledged. -' "The question * of the amount of dividend to be paid is no doubt of the deepest interest to shareholders. It received very careful consideration from your directors and it was decided to recommend that a final dividend of 2 per cent, for the three months ending March 31 last be paid—making a dividend of 4 4-sths per cent, per annum for the period. PRESSURE OF TAXATION. "The incidence of income tax now presses so heavily that the payment of even this moderate dividend is only made possible by the earnings of the substantial reserves held—the self-de-nial savings of past years. It presses particularly hard on companies like ours, which are really co-operative investment concerns, whose operations and earnings are subject to legislative restrictions and whose shares and deposits are held in such small amounts, being mainly hard-earned savings entrusted to us for safe investment; the average paid-up holding In sharei Is

£360 and the average amount held on deposit by private individuals is £575 Is Bd. The company really started in 1874 as a building society, and although it was converted to the form of a public company in 1877, it has continued to carry on substantially the business of a co-operative building society.. "I desire again to acknowledge the assistance received from my co-direc-tors who have been most assiduous and regular in their attention to the company's affairs. Mr. Stewart is the retiring director, and is recommended for re-election. . "Mention of the zealous and conscientious work rendered by the staff during the year must also be made; they are both loyal and efficient, and your thanks are due to them. The staff retirement and benefit fund, approved at our last annual meeting, is now in operation and greatly appreci--3 In' conclusion, Mr. Fraser said that during the whole period there had been a continued inspection of securities and no new loan was made without the directors first seeing the security and a valuation by the company s valuer. The position of the company had been improved and strengthened. The times were extraordinarily difficult for companies such as theirs, but the work of improving their position was ' being steadily carried on, and shareholders would look forward to the future with every 'confidence. "In this the year of our diamond jubilee, we have every reason to congratulate ourselves on the strong and secure position of tne company," he remarked. The chairman then moved the adoption of the report and balance-sheet for the fifteen months to March 31, 1938, and Mr. R. P. Stewart seconded. The motion was carried. The motion for''the adoption of the report and balance-sheet was seconded Dy Mr. Stewart. He said it gave him great pleasure to do so for several reasons, the first being that it was the diamond jubilee of the establishment of the company. Another was the very satisfactory position disclosed by the balance-sheet and the chairman .* remarks, and the third was the results in the matters which had come before the Adjustment Commission. The results, had not been nearly so severe as they might have been, which, he thought, was indicative of the very fair way in which the company had dealt with mortgagors. There remained two or three cases to be heard and he apprehended no difficulty in respect to them. One other matter mentioned by Mr. Stewart was the value and strength afforded by the company by being guaranteed by tne New Zealand Insurance Co. in connection with the repayment of deposits. That advantage he thought should be emphasised more frequently and strongly as and when the occasion arose. There were no comments from shareholders on the report and balancesheet, which were adopted unanimously. . There being no other nomination, Mr. R. P. Stewart, the retiring direc- ' tor,' who offered himself for re-election, was declared elected for a further term. Messrs. E. W. Bucholz and W. S. Wheeler were re-elected auditors at the same remuneration as for ■ last year. DIRECTORS' FEES INCREASED. On the motion of the chairman and Mr R. L. Macalister, it was decided to alter, pursuant to clause 79 of the articles of association, the remuneration of each director for the past year and succeeding years by increasing it from £50 a ye«r to £65. Mr. Fraser made it clear that he was paid a salary and did not participate in the directors' fees. Mr; Macalister said he agreed with Mr. Fraser that the directors were deserving of greater remuneration for their efforts and the time they spent in the interests of the company, the success or otherwise of which depended very greatly on the inspections that were made of the securities or the securities offered. BUILDING SOCIETY PROPOSAL. The question of establishing a building society or acquiring an interest in an existing society was introduced by the chairman, who moved as follows:— "This meeting of shareholders authorises the directors to undertake the formation of a building society and/or to acquire an interest in an established building society if in their discretion they, consider it desirable to do so, the affairs of which may be managed in conjunction with the existing business of the company; and the directors are authorised to proceed with any negotiations and other steps necessary or desirable in their opinion for the formation of such building society and/or acquisition of such interest as may be available in an established society." The chairman said that the directors had considered the position and it was possible the company might be able to acquire an interest in an. existing building society. This society was properly constituted as a co-operative society and had certain features not common to the majority of building societies which had made such enormous strides in the Old Country. Mr. Fraser referred to the possibility in the future of finance for dwellings resting very largely with building societies and suggested that in the event of taxation and legislative restrictions becoming too severe it might be ■ very useful to have such a hand-maiden and avenue of retreat as a building society would provide. The directors had the power, to take the steps placed before the meeting in the resolution, but it was thought that the matter should be placed before the shareholders for an expression of their views. The resolution was not directive, but permissive.

r'Aftef a brief discussion the resolu ; tfon was carried with two dissentients.