WAIKATO COMPANY.

New Zealand Herald, Volume LXV, Issue 20076, 13 October 1928, Page 16

WAIKATO COMPANY.

S'AUJIEBS', CO-OPEBATIVE. JTRADE OF YEAR REVIEWED. INCREASE IN NET PROFIT. •'STRONG FINANCIAL POSITION. : (Extended Report By' Arrangement.) IJjBV TELEGRAPH. —OWN CORRESPONDENT.] HAMILTON. Friday. The annual meeting of tho I'armors Co-operativo Auctioneering Company was held to-day in t.'.ie Winter Show buildings, tho chairman of directors, Mr. 11. S. Hawkins, presiding over a record attendance of 250 shareholders.

Tn moving the adoption of tho report nnd balance-sheet, which liavo already Jjeen published, the chairman said: — "This timo las:, year I expressed the ♦pinion that wo could not expect any material increase in the prices realisable for our farm produce. I am pleased to think this has been entirely upset by nctual events. We have in fact had a .wonderful season, with increased production and high values; but 1 would still remind you that tlieso things aro beyond ■our control —producton is dependent on tho season, values on tho markets. Pendulum Always Swinging.

"The pendulum is always swinging one juay or tho other; wo can neither help it nor check it. In tho matters which do lie under our control—in effecting tho economics necessary to reduce tho cost of production—wci havo done nothing; we have made no appreciable effort. I appealed- to the Government to give us a lead in this direction.

"They say they cannot, which means that as long as th&y can borrow £3,000,000 to £10,000,000 each year, and collect some £24,000,000 out of us in taxation, they 'do not see tho necessity.' rerhaps in [view of the season's results we do not Bee the necessity cither, but in my opinion,' as a precaution against the inevitablebackward swing of tho pendulum, the necessity is there. "Tho balance-sheet on the liability side ehows no alteration in tho company's share capital or reserves, but a decrease in every other item, amounting in the aggregate to £6BOB. On tho other side our assets show an increase of £15,528, chiefly accounted for by our sundry dobtors, of which tho greater portion is on jptock accounts. Constant Supervision Exercised. "You will notice that tho amount under this heading, £223,880, is not only the largest item of our assets but it exceeds all tho othors put together. It is nearly three-quarters of our total paid-up capital. On tho soundness, therefore, of those advances depends tho whole financial stability of tho company, and you' will appreciate tho very great care and constant supervision of each item in that largo total that has to be and is being exercised. Adequate provision has been made for bad and doubtful debts, and as far as can possilcly be ascertained tho full jvaluo as stated is there. "Our properties have been further written down tci meet as far as possible present-day values. Our merchandise stocks, on a conservative valuation, show a decrease of some £4OOO. Our total outside liabilities—that is excluding capital and reserves—amount to £99,246, and our total assost to £639,829, giving a percentage of liabilities to assets of 15.51. ;which is another way of saying that for every £ls 10s we owe wo have assets to tho value of £ICO to meet it, with. The

balance, viz., £540.583, belongs to tho fihareholdcrs, the paid-up capital being £478,895. Profit and Loss Account.

''Tho outstanding foaturc of the profit and loss account is tho increased earning power combined with a still further slight reduction in expenses, tho percentage of expenses to gross profits being reduced to 68.5. Yon will remember that in 1920, our peak year, our total expenses amounted to £146,017. Since that time ,we havo boon gradually reducing them to the present figure of £80.470, thereby effecting a saving of £56,547. "Our net profit is more, than double that of last year, showing that the farmers' income is reflected in our own, and also showing that shareholders have responded to our appeal and arc more loyally supporting t.lio company to-day. The ff ; r nf ,un ' t available for distribution is ;i42,906 19b id, out of which v.e have already paid interest on preference share ,;^P ltill n mounting to £15,192 13s 6d, and of the balance wo propose paying a dividend of 6 per cent, on the ordinary share japital arid the. incorno tax for the year carrying the rest forward. , Stock Department Does Well. t Tho stock department has done particularly well, chiefly owing to tho increased valuo in all classes of stock during tlio latter half of the year. We have to ih° tho way back (o J920 to find equal results. It is estimated I hat over the whole period of 12 months the average price of all classes of sheep increased from .17s 4d of tho previous year to 22s 4d, and cattlo of all classes showed an averago increaso of nearly 20s per head. The •export price for ox beef opened at 30s per CIOOIb, advancing later to 555, and this iept the market firm throughout tho rest «f tho year. T!io local price at tho end jrjf August last reached the record of 48s Jicr 1001b. ''The market was good for all classes <nr sheep through tho summer months, and •luring tho autumn and early winter values improved, until fat wethers reached the average price cf 45s where they remained steady. The record price of the Hamilton yards has l.een 52s 9d. Indications are that farmers should be well .satisfied with the prices offering for lambs during (lie coming season. Question of Private Sales. flic ynrdings of pigs havo considerably increased, prices have been steady, and farmers may look forward to satisfactory returns. At, pedigree sales held by *is throughout the district prices havo Leon realised for all breeds of cattlo which compare very favourably with other parts «f the Dominion, Unfortunately, private feales are rapidly increasing, at the expense of our yard sales. Already more wieep and cattle, both in numbers and i aluos, are dealt with privately than go « yards. In consequence cerJrurtiotw'r ' '"r? are runnin R nt « small toX, , r "° flt ovtr ™»ts of sale exCOp atul '"'erest on capital to thn'nfn? K !r' C i S !" ay mor(> convenient Mm ns KO oT;i" W0 tlo , nbL if tllp v give 'rimy lTu!oro\\'!T ' !l ° H"" 1 th «y "oriouslv detractlron? t c h ° ln l ,nr, .V 'ng powor of t!m\,,,!, 171 1,10 earn-'"-■IK itrr °t «•&'* ~ urease compArel? with'provi sul)Stftntial initio indenting eonniclornlT yenrs * Wo jriorntnodllioß than hitherto "'and ° f •° m ' Jiavo romamotl on 11,1(1 prices which bus considerably loMeneTth ***}*' fit trading. Shipping 5 \ a o L mk (regular, enabling us to tako d«li, cn , 0«p indents K ,onth by Von °h & ry , 0 trough until December hid the ♦aroatmg an abnormal demand throughout

the whole of the district, with tho result that top-dres3ing is more widely appreciated than ever before. Our sales of grass and clover seeds last autumn were the heaviest for many years, the weather conditions being unusually favourable for bush burns. Progressive farmers arc more than ever realising the importance of tho highest. grade seeds. Very little chaff is now available in the Waikato, and our supplies are drawn from the South and Ilawko's Bay. Prices liavo remained fairly even throughout tho year, and the comparatively small amount required has reached tho farmer at a reasonable figure. " Tho motor is gradually killing the demand lor feed oats and there is very littlo inquiry for seed Algerians or other grazing varieties. Tho salo of wheat shows an increase. Sales of fencing wire have been heavier than usuifl. There is a marked preference for English, although tho prico is higher than tho Canadian. There has been a good demand for posts, and the quality has been well up to the average. In hardware wo confine our. attention as far as possiblo to lines of British manufacture. Wo indent direct, and offer a good rango of selection at comparatively low prices. " In groceries wo handle the highest quality obtainable, and our policy in doing so is justified by the increasing sales in this section of our business. We have been successful in placing on the market and establishing a substantial demand for our ' Farmers ' motor spirit. This is imported direct, and is of tho highest grade, second to none in New Zealand to-day. The price, is reasonable, and we are looking forward to largely increased sales during tho coming year. Wo also import direct lubricating oils of the best quality, and can fulfil your .requirements at a moderato cost. Large Business in Wool. ''Our wool department had a most satisfactory year, tho total number of bales offered at tho three sales being 9393, an increase of over 600 bales on tho previous season. The total weight handled was 3.354,8031b., with a gross value of £213,701. Tho November and February sales filled our stores to the utmost capacity and handling was difficult and expensive. Wo were fortunately able to hire outside flooring spaco, without which we could not have coped >vith tho amount received. Of the above somo 1400 bales wero sold on account of North .Auckland clients, and a successful canvass of that district carried out in April and May last leads us to expect a material increase for the coming season. "In view ot tho inadequate space at our disposal tho directors have sanctioned tho erection of a new floor on the site recently purchased from tho North Auckland Farmers' Association and adjoining our present store. This wo hope will be completed in time for tho coming season. Private buying of wool direct from the grower appears to bo on the increase. The buyer in every case expects to make a profit, and it is seldom that a grower receives as good a return as when his wool is sold at auction. Ilide and skin sales are held every fortnight throughout the year. Feature ol Export Trade. "During the height of tho season we aro dependent to a certain extent upon extra tonnage from Australia to meet our requirements, but shipowners have always been able to meet our demands and provide regular sailings as required by tho various control boards. A feature of last season's exports was the increase in shipments to America of both meat and dairy produce, th:!s being brought about by tho embargo on imports into the United States from countiies having the foot-and-mouth disease. How long this state of affairs will continue is doubtful, as a largo amount of American capital is invested in tho Argentine, the principal country affected.

"The outlook, however, for further trade with Amer'-'a looks distinctly promising. Our Auckland agency of the Cunard and Commonwealth and Dominion Line of steamers has, as anticipated, proved a valuable agency and is likely to become an increasingly valuable adjunct to our business. 'Hie Cunard liners are popular with tourists for transatlantic voyages, and our passenger bookings show an increase each year. With every prospoct of increased exports of dairy produce, meat, wool and apples, we can look forward to a good year in this department. "The usefulness of this department has again been, mado manifest, and tho popularity of tho New Zealand Insurance Company, for whom wo act as chief agents in this territory, enables us to write good business. Then is room, however, for improvement, and may I suggest that those clients who have hitherto placed their risks elsewhere should give thought to allowing us to handlo their insurances. They, would, I am sure, be satisfied with tho service rendered by this department. Recovery from Depression.

"Imports and exports for the period under review show a most satisfactory balance in favour of tho Dominion, and this is reflected in tho improved state of tho money market. But although money has been plentiful trade generally has been sluggish. Jn most lines of business there is far too much competition and few traders; havo earned an adequate return on their capital. The various Farmers' Co-operative Associations are steadily but slowly recovering from tho depression. 1. am told there lias been little difficulty ir. obtaining money on mortgage of good rural land provided the valuations are based on the productive capacity of the land.

"With the prospect of.a good season beforo us, mortgage rates, which are running from I) to 6j per cent., arc not likely to increase. On the other hand a considerablo amobnt of New Zealand money has been s:nt, and is still being sent, for in\estmerit in Australia, where rates of inteiest aro higher than they aro hero. This is nut a satisfactory state of affairs, and unless rates in New Zealand are maintained friuly closo to thoso in the Commonwealth the movement will continue.

"Ibe Government still (ell us they can givo no relief in company taxation. Let me remind you again what it, means to each ~t you. Last year, although you received no dividend, your company had tu pay 4s 6d out of every net pound it earned. Most cf that money ought to bo in your pockets to-day. It requires £28,734 to pay a 6 per cent, dividend on our preference and ordinary share capital. 'io obtain this, without anything to put to reserves or any balance"to carry forward, we havo to make a minimum not profit of £37.076. Burden of Income Tax. "The greater part of the difference, which is deducted as income tax, ought to belong to you. From 1916, in which year the company tax first became an unjust tax, to tho present time, this company has paid in income tax alone £105,735. This amount would have paid you an 8 per cent dividend on ordinary capital for each of the tour years you received nothing, and left a balance of over £33,000. "During tho introduction of the Budget the land tax was referred to by the Minister of Finance, Hon. W. Dowriie Stewart, in these words: 'The graduated land la < often operates harshly. When a business has branches in many urban centies all its sites aro aggregated for land tax although there is no real aggregation, and in each centre that business has to compete with local rivals who pay no graduated land tax.' A further handicap is that we are not only taxed on our freehold properties, but on our leasehold as well, and this addition increases the basic iate over the whole, ff the actual owner is liable for land tax, which in somo cases he is not, tho small amount he does pay is credited against tho company's assessment..

Large Sums Paid to State. "Ir 1916 our land tax amounted to MO; last year it was £1653. Since 1916 we have paid out £14,330 in land tax, and this, added to our income tax, makes a totai of £120,065 paid to the Government ovei 12 years This has been a first charge on oui profits, amounting to 53 per cent, on our ordinary share capital, and on top t serious depression which has n! 8 - U L " vnr Ulis country it is not 2 hi™ 8 . 1 during four of those years SJufJr uni ""° l -° W m a iivi.

" By request, I should like to put on record" tho great regret felt by tho directors on hearing of the sudden death of Mr. O. R. Farrer," said tho chairman in concluding his review. "Tho late Mr. Farrer was nominated for election to tho board, not, I believe, because of any disagreement with their policy, but because lie considered the interests he represented were entitled to a scat. From that point of view I certainly agree that ho was better entitled than any of us. "With regard to Mr. Lowry's nomination, you will realise that the directors have to carry out the articles of tho company exactly as they are set down. If they aro in doubt 'on any point it is their duty to consult their legal advisers. That is what has been done throughout in this case. Tho company's solicitor was present when the nomination papers were opened and it was ho who, when tho papers wero submitted to him, decided that Mr. Lowry's nomination was not in order. To tho question whether there was anything the directors could do to put it in order for this election. the answer was 'No.' "When the transfer of certain shares to Mr. Lowry came before the board that ruling held good. Every director clearly understood that the transfer of these shares could not validate Mr. Lowry's nomination. Consequently they were dealt with from a purely business point of view and without reference to tho election at all. Tho directors wero willing to do anything they could to givo Mr. Ix3wry his opportunity, but they could not disregard the company's articles. " 1 move the adoption of the report and balance-sheet, and in doing so I wish to congratulate you on attaining your 21st birthday and also on the support which our results have given to farmers' cooperation throughout New Zealand over a very difficult period."

Mr. T. C. Blackott, of To Kowhai, in seconding the adoption of tho report and balance-sheet, congratulated tho directors on tho satisfactory balance-sheet that had been submitted. Many old-established companies throughout the country had had to write down their assets or take other drastic steps to adjust their finances. The Farmers' Co-operative Auctioneering Company, Limited, had kept their assets intact and anyone who regarded tho position fairly would acknowledge that tho directors had done well. Tho balance-sheet was a refutation of the criticism that had been levelled against the company. Solid Position of Company.

Mr. J. S. Fishdr, of Cambridge, said the company started by giving rebates. That policy was a mistake, arid should never havo been adopted. It was tho farmers' privilege to growl, but there was no gainsaying the fact that tho farmers of tho Waikato wero prosperous to-day and that a measure of this prosperity was duo to tho operations of tho company. Mr. Fisher congratulated the directors on tho excellent stato of the balance-sheet presented. Mr. A. W. Blanchard, of Auckland, congratulated Mr. Hawkins and Mr. J. Barugh on attaining their majority in tho service of the company as directors. Ho drew attention to tho i'act that practically no unpaid Capital had been called up in recent years. No "C" issues had been sold during tho last two years. Steps should bo taken to increase the valuo of tho company's shares, the preference shares being discounted by 33 1-3 per cent, on the open market. Mr. Blanchard congratulated the directors on tho solid position of the company's assets. 110 thought a third of the capital was too much to bo locked up in property, and suggested that if certain saleyards were not returning a fair profit owing to the prevalence of private sales, tho yards should be sold and the money devoted to other purposes. Comment by Chairman.

Tho chairman said the shareholders had never been pressed to pay their calls, but now that the position of most of the shareholders was better, more of the shares would probably be called up. The valuo of company shares was determined by their earning power. Ho could not understand why tho preference shares should not realise their face valuo on the market, for they were worth that valuo any day. He regretted tho "C" issue shares wero worth so little, and said that tho directors would consider what they could do with them.

Saleyards sites were practically worthless for any purpose other than saleyards, said Mr. Hawkins, and it would bo difficult to realise their value. So long as the company's yards continued to return a profit ho did not think it would bo wise to sell them. They would bo written off the books in tho course of a fow years. Tho report and balance-sheet were adopted without further discussion Tho chairman said the next business was to declare tho election of two directors. Ifc pointed cut that, 170 ballot papers had been sent in unsigned unci were therefore informal. Messrs. E. M. Edkins and Walter Scavill were declared re-elected directors. The voting was:—Mr. Edkins, 41; Mr. Seavill, 1737; Mr. Mervyn Wells, 1132. Messrs. (J. W Armstrong and K. P. Hazard were reappointed auditors. Tho voting was:—Mr. Armstrong, 1808; Mr. Hazard, 1752; Mr. R English, 798; Mr. T. G. Reynolds, 698. Tho auditors' remuneration was fixed at £SOO. Tribute to Directors. Mr. I). , Hay was re elected shareholders' scrutineer. Mr. Mervyn Wells congratulated the two directors who had been . returned. They wero men of integrity and ability and lie felt suro they would continue to givo valuable servico to tho company. Mr. Wells said if at a futuro time ho could bo of servico to tho company he would bo glad to stand for election. Mr. Edkins thanked tho shareholders tor again returning him. Ho appealed for a better • understanding among the shareholders and invited them to sfato their grievances to the directors. Tho majority of tho staff wero loyal, ho said, but he regretted that there were somo who accepted salaries from tho company but about whoso loyalty there was some doubt. Mr. Seavill said lio regarded his reelection more as an endorsement of the policy ot tlio directors titan as a personal tribute. Mr. (1. W. Vcrcoe, one of tho company's auctioneers, moved that it bo a recommendation from the meeting to the directors that they set up forthwith a committee to control anil manage tho stock department, tho committee to consist of Messrs. (J. F. McCullagh, W. If. Hume. G. It. Wyllie and tho mover, such committee to work under tho directors in a similar position to a departmental manager and to confer and discuss with the genera) manager on all matters concerning policy and finance. A Suggestion Repudiated.

Mr. Vercoo strongly repudiated the suggestion that some of tho staff were not loyal to tlio company. He suggested that the committee should work with the idea of straightening out difficulties and putting Hie stock department on a firm basis. lie spoke with no spirit of antagonism and only desired to see tlio officers working harmoniously for the common good of the company. Mr. Vercoo said there was no use hiding the fact that there was a lot of dissatisfaction with tho stock department. Ho brought thi> resolution forward as a recommendation with a view to promoting tho welfare of tho company. Mr. W. Newell, in seconding Mr. Vercoe's motion, said he regarded tho directors personally with feelings of friendship, hut he would not disguise tho fact that he was dissatisfied with their administration of the stock department. Ho said he had made suggestions to tho directors regarding weaknesses in the department, hut his complaints had fallen on deaf ears, if steps wero not immediately taken to remedy tho present position in tho stock business, ho said, the company would lose this business. Mr. Newell considered that the increase in private sales of stock was due to indifferent management of the company'* stock department. Tho speaker strongly criticised the action of the company in appointing a junior stock manager outside the firm and placing him over old and tried Servants of tho company. Ho said this without any disrespect to tlio man who wu3 appointed.

Mr. Newell added that a man having authority to arrange terms with customers should be appointed to attend sales. Farmers should not bo required to go to tho company's oflico every time they wanted accommodation. Mr. Newell pointed out that one dealer, a former employee 6f tho company, had dono business valued at £IO,OOO, which the speaker regarded as being lost to tho company. Mr. Newell concluded by saying that the stock department was drifting and unless steps wcro taken to stop tho drift thero would be no business left. (Applause. ) Mr. G. F. McCullagh said he had served the company and its founders for over 40 years, and all. his energy and ability had gone to promoting the good of the company. Mr. Martin Butler repudiated the suggestion mado in a recent circular issued bv the chairman that the stock business was becoming of secondary importance, and lie urged that every effort be made to reestablish the confidence the shareholders used to have in tho stock department. Mr. J. McNicol said that during tho last four years Auckland had been drawing its fat beef from tho Waikato, whereas previously much of it had come from Hawke's Bay. Tho speaker said tho Farmers' Auctioneering Company enjoyed a monopoly of the stock business in tho Waikato in the past. Now tho business of tho opposition firms had grown out of all recognition. He supported (ho motion and hoped that everything would be done to regain tho stock business that had been lost.

Mr. Campbell Johnstone urged that more money shoul f bo realised to enable greater accommodation to bo offered to stock buyers, and that less attention should bo given to the merchandise department. Mr. P. Cleary said tho appointment of a committee might assist in stopping the drift that was occurring in the company's stock business. Mr. E. 11. Hammond, of Tamahere, said (ho chief courso of complaint appeared to be the lack of service rendered in the saleyards. Ho advised caution before men already in tho company's employment should be given control of (he department. Tho proposal was a dangerous one, lie thought, and ho opposed the motion en the grounds that it was undesirable to appoint a committeo consisting of employees of the company to step between the staff and the directors. Opposition to Proposal. Mr. Blanchard described the proposal as a wedge between the shareholders and tho directors. Mr. Douglas Hay, of Hamilton, paid a tribute to tho outstanding ability of tho general manager, Mr. A. C. Bushel. Ho considered it would not be wise to appoint such a committee. Tho company had reason to be proud of tho fact that it had kept its contract at a limo when greater concerns had not done so.

Mr. H. J. Gill urged that the resolution bo not put. The directors could not fail to consider seriously any suggestion put forward by such a iargc gathering of shareholders, but ho did not care to see a pistol presented to their heads. In reply to criticism, Mr. Vercoe said his idea was that the cornmitteo should work under the direction of the general manager and tho directors. The committee would havo no power. It would carry out its duties in an honourable way, and thero was no idea that it should interfere with the authority of the directors and general manager. Mr. Hawkins said tho directors had previously considered a similar proposal put forward by Mr. Vercoe two months ago, and had decided against it, ar.d ho was practically certain if it came up again it woultl bo rejected.

Mr. Vercoe said he had no knowledge that tho directors had considered tho matter.

Mr. J. J. Aitkcn, Kereone, pointed out those nominated for tho committee had never had control of the department, and he was certain the company had to thank them for (he business that had been retained. (Applause.) An Amicable Arrangement.

The chairman asked if tho criticism of tho stock department did hot reflect on the very men who wero proposed for tho committee. Mr. Hawkins considered the idea of a committee, which would incidentally supersede tho manager, was an unwieldy one, and ho doubted if it was practicable. Although tho company had lost a certain amount of stock business which had been done by a dealer tho company's returns of tho last few months had showed a marked improvement. Tho proposal was not quito fair to the manager of tho stock department, who would develop in time into tho very type of man wanted for tho job. Mr. Nicoll suggested that tho increased business was due to improved price, and not to increased sales. Tho motion was carried on a show of hands by 102 votes -to about 15. A poll was demanded by Messrs. Blanchard, Hay and the chairman. Tho uso of proxies was considered by Mr. W. McLean to bo unfair. Mr. 11. J. Sliortt requested that a referendum of all tho shareholders bo held. The chairman ruled that if tho resolution was not withdrawn a poll must bo held. Mr. Newell warned the directors that if they pressed tho matter they would create a rebellion. Finally Mr. Vercoe asked permission to interpolate tho words " that they tako into consideration " which was omitted front tho motion as it was first put. On this being agreed to tin chairman said he would not press tho poll. The matter was thus amicably arranged. Mr. Newell emphasised tho urgency of action being taken immediately by the directors. Tho meeting was then closed.