BUSINESS EXPANDS.

New Zealand Herald, Volume LXV, Issue 19962, 2 June 1928, Page 14

BUSINESS EXPANDS.

[ FARMERS' FERTILISER CO. SHAREHOLDERS GRATIFIED. DIVIDEND OF 6 PER CENT. Satisfaction with the expansion of business during the year was expressed at the annual meeting of shareholders of the Auckland Fanners' Fertiliser Company, Limited, yesterday. Sir. A. A. Ross, chairman of directors, presided. In his address, Mr. Ross said :—" I cannot refrain from expressing the opinion that our large body of shareholders will be gratified to know that in spite of (lie difficult period through which the company has passed, the result is sufficiently good to warrant your directors in recommending a dividend payment of 6 per cent.

"On tho oilier hand, it is to be regretted that the nature of competition was such that it necessitated any reduction as compared with previous years. We may console ourselves, however, with the knowledge that it is rarely an industry or business undertaking is not faced with unwholesome competition at some period of its history. It is said that competition is good for trade, and the soundness of tho quotation is exem- ! plified in the case of tho experience we have had in the fertiliser industry and particularly as applying to the business of the New Zealand Farmers' Fertiliser Company, Limited. Profit of £17,625 Shown. "Tho expansion in business during the past year has been quite important. In the beginning of the year it was problematical whether tho company would make loss or a profit, but as the result of I a greatly-increased output, together with (he most rigid economy in the matter of overhead charges, the final outcome of. tho year's operations has resulted in a profit of £17.625 15s 2d. "Perhaps tho most important feature, of the competition h;is been the educational valuo lo the farmer of tho merits of superphosphate, and the benefits to be derived from liberal (op-dressing. I think it will bo conceded that those pastures topdressed during the, spring held particularly well during (ho long dry spell, and today, after beneficial rains and further top-dressing during the autumn, tho wholo country presents a splendid appearance. Thoro can be no doubt that farmers took tho fullest advantage, of low prices and top-dressed in a manner that, has brought them beneficial results, so (hat after all, while dangerously low prices may havo caused uneasiness in (ho industry, the farmer has reaped the, benefit, and tho country looks well. " I am glad (o inform you that an 'armistice' was reached in the so-called fertiliser 'war' last December, when all manufacturers came together after many previous conferences which proved abortive. An agreement having been reached, the natural outcome was an advance in price to <i level considered by all manufacturers to be reasonable, having duo regard to the peculiar nature of the industry and the excessive and steady do* preciation hi tho acid section of tho works, involving as it does heavy annual expenditure, so that efficiency may bo maintained unimpaired. Two Additional Stores. "The very marked increase in business at Auckland and New Plymouth this year constitutes a new record, which I hopo will be maintained this coming year, and possibly exceeded. At any rate, it is reasonably certain that still greater quantities will bo required in the future and so that, the company may keep pace with the demand, your directors have authorised the construction of two large additional stores for superphosphate, one to bo erected at Auckland and the other at New Plymouth. "At tho annual meeting last year I made reference to the, steady growth of the company's business, and the possibility that if the continued in tho same ratio as during the past six years, it would soon bo necessary to consider an enlargement. The position is being watched very closely by your directors, and (here can be no doubt before long that the necessity must arise for tho complete duplication cf tho Auckland works, provision for which was fully made in tho original layout. This, however, may not be necessary for another two or three years, but you may be satisfied that the board will watch* the development closely. This is a position which I am sure must give satisfaction to all shareholders, as indicating tho important progress of the, company and justifying the long view which your directors took when the works were originally planned. "Regarding the New Plymouth works, I am glad to be able to inform you that the establishment of these works in Taranaki has been fully justified. The output has reached a very satisfactory level, and while there is still room for much improvement, I have no doubt that before long these works will be kept fully employed. The revenue derived from other sources by the lease of properties and income from the pig industry is quite an important item, and I feel sure that as the latter industry develops, as it is bound to do, the return to the company will reach a very satisfactory figure. Items in Balance-Sheet. "Turning to the balance-sheet, I should say there is really little that calls for special comment. The liability to the Bank of New Zealand may appear to shareholders to be at a high level, but this is an item which should always be viewed in relation to the company's assets. The figure naturally is a fluctuating one, and as the company continues to progress, we may expect to see the liability substantially reduced. " 'Open accounts' includes income-tax and such other liabilities as are not immediately due for payment. 'Sundry creditors' represents the usual current accounts, for goods purchases and incidentals .required in the conduct of the business. The reserve account stands at the sanio figure as last year, and until the intangible assets appearing on the balancesheet are completely written off, it is unlikely that any difference will take place in this account. "On the assets side of the accounts, it will lie noted that, after providing for additions to the New Plymouth plant, the value of land, buildings, machinery and plant, at Auckland and New Plvmouth stands at £12.827 13s 7d less than last year, showing that ample depreciation has been written off. "Stocks at £42'.650 lis 2d are very much less than last year. These have been valued with the customary conservatism and while at a low level are quite ample to meet all requirements, especially as raw material* are regularly coming to hand: Accounts Owed to Company,

"Accounts owing to the company stand at a very much higher figure than last, year, showing an increase of £18.119 7s 2d, which clearly indicates a marked increase in business. Little or no credit is given, so that all acco.unts are really firstclass. Bad debts have been fully provided for, and tho policy of the company is such that the amount under this heading is a negligible one. "The net profit for the year amounts to £17,625 *' 15s 2d. to which must be added the balance brought forward from last year of £13,236 5s 3d, making a total of £30,862 0s 5d available for distribution. "Your directors recommend the payment of a dividend of 6 per cent., absorbing £15,719 14s, and leaving tho sum of

£15,142 6s sel to be carried forward to next, year's account. The amount to be carried forward, when added to the reserve account, gives a total reserve of £33,789 lis 3d. 'T think it will be obvious to all from the accounts submitted, and having regard to tho difficult period through which we have passed, that the position of the company may be described as thoroughly sound. "I cannot let this opportunity pass without. making special reference (o my fel-low-directors. My duties as chairman have been made easy by reason of the splendid spirit which has always pievailed, ant! (he keen interest, which they have at all times manifested in (he affairs of the company, and I wish to express my warmest thanks for their valued assistance and co-operation. "I now have pleasure in formallv moving the adoption of the report and statement of accounts." The motion was seconded by Mr. G. 0. Barber and carried unanimously. Taramaki Director's Views. Mr. J. S. Connett, of Taranaki, expressed the opinion that shareholders would be gratilied with the result of the past year's; operations. There could be no doubt tho opinion was general that the establishment of works in Taranaki district had been a move in the right direction, and that shareholders, particularly in Taranaki, as well, as the other districts in the southern provinces, have benefited much by their establishment, which had brought about substantial reductions in prices. The output during the past year had reached a very satisfactory level, and ho hoped the present year would shew a furtjier increase, which naturally would mean a reduction in overhead costs, with tho probability of a further reduction in the selling-price later. No one could take exception to present-day quotations. Taking the profits of tho company over tho last eight years and the dividends paid over the last four years, it would bo found the average dividend-payments since the company commenced manufacturing worked out at something like 3g per cent., which was a very low return. Rock Phosphate Supplies. Mr. Barber wanted to know whether the company was directly interc.sted*in refrigeration, and what was tho position with regard to obtaining adequate supplies of rook phosphate. The chairman explained that the refrigerating portion of the plant had been leased, and that tho arrangement was showing th<! company a satisfactory return. So far sis tho supplies of rock phosphate were concerned, the company Was in a similar position to that of other manufacturers. The demand in Australia and New Zealand was beyon-d (he csipacitv of Nauru and Ocean Islands. Supplies were coming from other sources, such as Makatea Island and Morocco, but ample supplies were assured to meet the Dominion's needs. Mr. Barber moved a special vote of thanks to (he directors for the manner in which (.hey had looked after the. company's interests during the past twelve months. He thought it would come as a surprise to manv shareholders, in view of the substantial reduction which had taken ulacc in prices during the last year, that the company had been able to win through and return a dividend. The motion was seconded by Mr. Mather and carried with enthusiasm. Conversion of Shares. The chairman, on behalf of the directors, expressed appreciation of the vote which had just been passed, and assured (lie shareholders that the board would closely watch their interests in the future as thev had done in the past. Mr. J. Boddie moved a vote of thanks to tiie staff for their splendid service and the loyal manner in which they had carried out their duties. Mr. Connett, in seconding the motion, also paid a tribute to the general efficiency of the staff. Me««rs. G. T. Bavly, R. D. Dux field and H. I?. Mackenzie were, re-elected to the directorate of the company. At an extraordinarv general meeting of (he companv. held after (he annual meeting, a resolution was pasted authorising (lie subdivision of thr- 399 f 5 shares the ranital into 261.995 £J shares. This resolution will rennire confirmation at a second ev(raordmary general meeting. to h<> he'd in 'he company's office on Thursdav, June 21.