NEW ZEALAND LOAN AND MERCANTILE.

New Zealand Herald, Volume XLIII, Issue 13081, 22 January 1906, Page 6

NEW ZEALAND LOAN AND MERCANTILE.

ANNUAL MEETING. [FROM OCR own correspondent.] London. December 15. Yesterday afternoon, at 1. Coleman-street. the 11th annual meeting of the New Zealand Loan and Mercantile Agency Company was held, Mr. Dawes, chairman of the company, presiding. I sent you last week a summary of the report which had been issued by the directors Before moving its adoption, together with that of the balance-sheet, the chairman first made reference to the vacancy that had occurred on the board through the death of Mr. Garrick. Mr. Mitchison had been appointed in his place: that gentleman had been associated with them in the New Zealand Land Association for a good many years, and the directors were convinced that Mr. Mite bison's services would prove of advantage to the New Zealand Loan and Mercantile Agency Company. The result of the year's working was that after the payment of tne interest on the prior lien, the second and third debenture stocks, there remained a balance of £1602 to be carried forward to next year's account. The chief feature of the accounts for the vear was that it had been necessary to provide for the cost of carrying into effect the purchase of the trustees' certificates in accordance with the Companies Act of Parliament of 1904, and also for the necessary heavy legal ami other expenses in connection with the passing of the Act. These were chiefly dealt with in the balance-sheet of the New Zealand Land Association, a copy of which was in the hands of shareholders, and if they turned to it they would see that the Land Association had purchased 775.C00 trustees' certificates at a cost of £76,997, which were nowrepresented in the books of the Laud Association by 15,500 fully-paid ordinary shares of the Loan and Mercantile Company of 10s each, the face value of which was £7750. That transaction entailed a loss of £69,247, and to the extent of £40.934, this had been provided by the Land Association from revenue, and from a realised surplus on the sales of properties and stock, leaving a balance to be dealt with in the future of about £23,312, which in the meantime was carried to a trustees' certificates suspense account. To assist the New Zealand Land Association in providing for that heavy payment of £69,247, the New- Zealand Loan Company had waived the year's interest due to it on the debentures of the Land Association, amounting to £14,267, which interest was duly received last year, and had also paid its proportion of the costs in connection with the Act of Parliament, amounting to £3543. In that way. through the incidence of the carrying out of the trustees' certificates scheme, their revenue account suffered to the extent of £17,815, which must be borne in mind, when comparing this year's account with that of last year. The asset of the New Zealand Land Association in their balance-sheet, continued the chairman, was in consequence of the transactions in connection with the trustees' certificates, depreciated to the extent of £28,312: that apparent capita! loss might have been dealt with by writing off the amount from their reserves forthwith. But the directors, having every hope that the Land Association would be able before long to make good the amount from their revenue, had preferred meanwhile to let it stand as a deficit in the value of the Land Association's asset. The directors, of course, foresaw, when they first embarked upon the scheme for the purchase of these certificates, that that would necessarily involve a temporary depreciation in the value of the assets of the Land Association, seeing that the trustees' certificates purchased by them, when deprived as they were by the scheme of the special rights attaching thereto, could not be taken as representing more than the par value of the trustees' shares against which they were issued, and which was now represented by 15,509 shares of 10s each; but they always anticipated great benefit to the company, and to all classes of its se-curity-holders, as likely to result from the scheme. To a very considerable extent that benefit was now apparent, not only in the price of the company's securities, but in the fact shown on the face of the balance-sheet, that the shareholders were in a far better position than they had been at any time since the inauguration of the company. (Applause.) It was sufficient for the chairman to say that the directors thought that even greater benefits would be reaped in the future, and that no class of security-holder or shareholder in the Loan and Mercantile Company would ever have occasion to regret the passing of the Act. (Applause.) Next the chairman made reference to a paragraph in the report, which ran thus: " As well as for a loss resulting from a reaiiss,t''oii during the year on capital account." As no similar reference had appeared in any of the company's previous reports, the chairman explained that the words were 'iiserted at the request of the auditors, who did not altogether agree with the way it was proposed to provide for a lose on a certain account inherited from the old company. No special provision was taken under the scheme of 1897 for a prospective loss on that account, as the board at that time considered it satisfactory, but, unfortunately, it had not proved so, and the board had thought it advisable to meet the now ascertained balance of the loss partly by applying the surplus profit accrued during the year from the sale of one of the station properties, and providing the balance from revenue. The lioard believed that that course was preferable to the alternative of charging the loss to the fund provided under the scheme, which was allocated to particular accounts, provision for which was considered necessary, but among which the account in question was not included. He was sure that the decision of the board, possibly in the direction of over-caution, would commend itself to shareholders. (Applause.) The past year had proved a fairly satisfactory one to those concerned in the Australasian trade; the'season had been generally good, and market values of the leading exports had been maintained at a high level, causing a steady improvement in the conditions of business. As to the future, the outlook on the whole was encouraging, and the last report showed that an excellent season was being experienced throughout the greater part of Australia. New Zealand had enjoyed great prosperity the last few years, and in consequence the returns of the Agency Company had been satisfactory; the directors hoped for an equally good result next year, bearing in mind the high prices ruling. The market for wool had been good, and the demand had practically exceeded the supply. The market for frozen mutton and lamb, in which the New Zealand Loan and Mercantile Agency Company was especially interested, had been on the whole satisfactory, and a fair level of prices had been maintained. The chairman then moved the adoption of the report and balance-sheet. The motion was seconded by Mr. Francis R. Russell.

Mr. Gumming said the shareholders, particularly the debenture-holder?, were to be congratulated. He asked several questions. In reply to these, the Chairman said the loss charged to revenue this year was £9000. All previous expenses in connection with the trustees' certificates had been charged under the £7000 put down for obtaining the Act of Parliament.

In reply to further questions, the Chairman said the trustees' certificates had now totally disappeared.' The directors were anxious to see a dividend paid; but he could say nothing- as to there being one next year. The report was agreed to. Mr. Mitchison having been reappointed a director, a resolution relating to a lien in Victoria, to comply with the. Victorian Acts, was passed, and the meeting closed with a vote of thanks to the chairman.