SUCCESSFUL YEAR

New Zealand Herald, Volume LXIX, Issue 21248, 30 July 1932, Page 12

SUCCESSFUL YEAR

FARMERS' FERTILISER CO. IMPROVEMENT IN POSITION DIVIDEND OF 5 PER CENT " A very marked improvement in the company's position is how I can best describe tlie result of the past year's operations," said Mr. A. A. Ross, chairman of directors of the New Zealand Farmers' Fertiliser Company, Limited, at the annual meeting of shareholders yesterday, when , moving the adoption of the report and balance-sheet, as published in the Herald on June 20. "I am -only repeating a well-worn phrase," said Mr. Ross, " when I say that wo aro passing through very strenuous times, and it is the .reverse of consoling to know that, the depression is world-wide and consequently tho process of recovery is bound to be so much more difficult. The future, however, is not without hope. "Our principal customer, Great Britain, is meeting her problems in a very masterful way. Her departure from the gold standard makes more possible a substantial recovery in prices. Tho recent conversion of tho £2,000,000,000 war loan to a per cent rate of interest and sundry other important adjustments will materially aid in the reduction of costs in British industries and in tho regaining of her overseas trade. The Ottawa Conference should evolve something of advantage to the Empire, while the Lausanno Conference has already made a marked improvement in tho international outlook. AH these things must eventually react to our advantage in New Zealand. Fertiliser Industry's Importance

"Tho plight of our primary industries is certainly very serious, and the road to complete recovery will be long and arduous. However, many adjustments have already been made, all tending to meet the position which iias arisen, and it only requires a definite upward movement in the prices of our primary products, which is a possibility that we cannot rule out, and which may eventuate sooner than we expect, and things would present an altogether different aspect. "Tho Government is to bo commended for its practical effort to relieve tho farmers' difficulties by the subsidy on fertilisers. This has served a two-fold purpose. It has been successful in encouraging farmers to maintain and increase production and at Lhe same time it lias stimulated tho fertiliser industry, which is ono of tho most important of our secondary industries, if not the most important. Because of its value as a means of increasing production it may rightly be described as a secondary industry of primary importance. "With tho advent of tho subsidy and in the hopo of a very much improved demand, manufacturers and distributors mado further contributions, which made possiblo a very substantial reduction in the price to the farmer. The result was a considerable improvement in output, and ovdti at tho low price a better financial' return to tho company, as tho figures show. I wish to say, however, that manufacturers are working on very close margins, arfd the present low price can be maintained only if output is assured. Improvements in Manufacture

"Considerable improvements in manufacturing methods have recently been introduced, resulting in a greatly improved product, and this, in addition to the greatly reduced price, will servo to show that this company is doing its share as a farmers' concern in assisting farmers to mako tho adjustments necessitated by the present conditions. "This reminds mo that in our efforts to give service wo have for some timo past been issuing monthly to 35.000 farmers in the North Island a little publication entitled the Fertiliser Record. The object of tho publication is to convey to farmers information of a worth-while nature, and tho articles which tho Record has contained, 1 am sure, will bo looked upon by all recipients as possessing something of an educational and instructive value. We have amplo evidence that tho expense is more than justified by tho goodwill which the publication has brought to the company. "The question of tho manufacture of other lines besides acid fertilisers has been engaging tho attention of your directors. We liavo for some time been manufacturing and marketing sulphate of iron, which is an effective remedy for iron deficiency in soils, and is used for many other purposes; also ferrous ammonium sulphate, which is used for tho improvement of lawns and sports grounds. Sulphate of Copper Plant "We are completing the erection of a plant for tho manufacture of sulphate of copper, which is too well known and too widely used to require any mention of its uses. Wo have also some further developments under way, and these extensions will, I am satisfied, bo of considerable benefit to the company financially and otherwise. They will probably, as time goes on, become more and more important, and thlis obviate tho necessity of tho company depending altogether upon one line of manufacture.

"Coming now to tho principal business before the meeting, I will refer to a few of the main aspects of the balance-sheet. Our liability to creditors stands at £10,936, as against £18,348 last year, showing a reduction of £7412. Tho bank liability shows a considerable reduction, having como down by £39,434, which is in keeping with tho indications I made in my address last year. A sum of £2352 lias been added to reserve account, which now stands at £20,000. It is tho policy of your directors to add to this account from year to year as profits will permit. Tho liability for unpaid dividends is down by £668. " On the assets side of the balance-sheet tho item of land, buildings, plant and machinery shows a reduction on last year of £6363, but these assets wero added to during tho year by more than this figure in new capital expenditure. They are being steadily written down and to-day can bo considered as standing at a very safo valuation for two large, well-equipped and up-to-date fertiliser works.

Sound Position of Company

" Tho" end of tho financial year as now fixed comes near tho end of tho annual busy period. It is not necessary to carry largo stocks at (his stage, as there is always a lower output during tho winter months. Tho low value of stocks shown in tho balance-sheet is .an indication that there is no unnecessary tying-up of capital in that direction. I may also mention that the values are on a safe basis. The increase in sundry debtors account of £9OOO is an indication of tho increased business as compared with the samo period last year, and I wish to again mention that as a result of tho company's policy tho bad debts still remain a negligible quantity. " Tho net result is that, after adding £2352 to reserve, there remains a profit for tho year of £13,432 12s 3d, which, with £20,009 9s 7d brought forward from last year, makes available for distribution £33,442 Is 100. " Tho directors propose to pay a dividend of 5 per cent, absorbing £13,099 15s, and to carry forward tho balance, £20,342 6s lOd, to next year's accounts, thus making a total reserve of £40,342 6s lOd and showing the company to bo in a very sound position. " I wish to say, in conclusion, that I am fortunate in having associated with me on tho board of directors members who have always carried their responsibilities seriously and who take the keenest interest in the company's welfare." Their s'plen did co-operation has made my task a comparatively easy aud pleasant one. I now take pleasure in formally moving the adoption of the report and balance-sheet."-

In 'seconding the motion, Mr. R. H. Mather said he would like to congratulate the directors on entering the dividend bsfc again. When they considered the difficult times in which they were trading the dividend was very satisfactory Ho suggested that they should not pay too big a di dend in future until the reserve fund had been built up to a larger figure. I recommend the strengthening of the reserve fund " be said, "which would enable the company to buy in„the cheapest market He further suggested that the figures for buildings depreciation should be shown in the balance-sheet. He again congratulated the directors upon their year's work. Mr. W. Dawson questioned whether it was worth while stating the buildings depreciation figure as long as shareholders were assured that it had been allowed for adequately. He asked whether the cost of circulating the Fertiliser Record was warranted, and said he wondered if the directors were assured that they wore getting full value for it. "We do appreciate the fact that the company has returned to a dividend-paying basis once more,' he said. Buying in Best Markets Mr. S. I. Crookes said every director appreciated the remarks that had been passed. The dividend was only 5 per cent, and he thought the company could see its way to grant that. He assured them that any question of an increased dividend in the future would be carefully considered. Their aim was to see that there were no blank years ahead. Ho knew the conservative policy behind the minds of his codirectors and could assure Mr. Mather that they did buy in the best markets. No one bought more cheaply than they bought. The question of publishing the Fertiliser Record had been given much thought and the decision to publish it was adopted only after serious consideration. Mr. Mather said ho would be very sorry to see the Record go. Farmers wanted all the education they could get regarding the use of fertilisers. If it- were not for fertilisers and freezing works New Zealand would be in a very serious state. In fact, the bottom would fall out of the country. It was fertilisers and freezing chambers which kept the country going. Building up the Reserve Mr. Ross said that, with regard to the dividend being a small one, there was no question but that it would have been very bad policv, in the present times, to pay a higher dividend, even if they could have afforded it. They had a big liability to the hank and any profits should be devoted toward meeting that liability. They would see that good work in that direction had been done in the past year. They had been building up a very solid reserve and something that would carry them through even if they met rough seas for a while longer. He was not sure whether they had shown depreciation details in the past, but the point would be considered in the future. The Fertiliser Record had been found to be a good investment, said Mr. Ross. They looked upon it as an advertising medium, and as that it was an'outstanding success. They aiso considered it as an educational medium and thought it was their duty to educate the farmer on the lines it advocated. In those two respects it had been quite successful and he thought there was no fear that it would be discontinued. The report and balance-sheet were adopted. The following directors were re-elected: Messrs. J. S. Connett, F. R. Flatman and O. L. Marshall. The auditor, Mr. J. A. Duncan, was reappointed. Late Mr. James Boddie

Mr. Ross said lie wished to refer to the loss which tho company had suffered in tho death of Mr. James Boddie, who had been a director of tiio company since its inception. "1 think Sir. Boddie. after the original promoters, was one of those most responsible for the company's formation," said Mr. Ross. "He always had a great faith in its possibilities and it was a source of great satisfaction to him when it got ever its difficulties and on its way. Jfis genial personality arid* wise counsel will bo missed by tho board of directors." .At tho chairman's request those present stood in silence as a tribute to Mr. Boddie's memory. Mr. Crookes, in moving that the meeting placo on record its appreciation of tho services of tho company's staff, said they were fortunate in having an enthusiastic, hard-working and loyal staff. There had been no sparing of effort. His only regret was that in the past year they had not been ablo to pay them in tho way they would have liked to do. Liko tho shareholders, they had had their cuts but, if anything, had worked harder than ever for less. Tho motion was seconded by Sir. R. D. Duxfield, and carried unanimously. Co-operation of Staff Mr. >T. Wilson, general manager and secretary, said he could say with every confidence that if ho bad been successful in his capacity as manager it was only because he had had tho co-operation of the staff in every possible way. The staff had faced its salary cuts sensibly, as it knew that cuts were general throughout the country. Mr. Dawson moved a vote of thanks to the directors. Ho said it was bard enough for companies trading in the towns to mako a profit, but for a company trading in the country it was even harder. It reflected great credit on the directors that they should show a dividend of 5 per cent. The motion was seconded by Mr. Slather and carried unanimously. Tho chairman thanked them for their voto and said it was. very much appreciated by tho directors. Tho position of a director was not always a bed of roses, when encountering difficulties, but they had managed in tho past yeaiv to meet their difficulties with some success. He thought that 12 months hence they ought to bo able to show a still better result. Subsidy from Government • Tho Government subsidy, which was being continued this year, made it possible to sell to the farmer at a very low price. He thought it was generally admitted that low produce prices had reached the very bottom, and that any movo now should bo in an upward direction. Indeed, there had been evidence of an upward movo recently. All tho timo tho company was seeking to reduco costs and to make profits in any other lines in close association with fertilisers, particularly sulphuric acid. No doubt these extra lines would develop and become a very important part of tho company's business. Mr. Crookes said ho would like tho shareholders to know that they were not getting any of their dividend out of the Government subsidy. Every penny of the subsidy went to reduco tho cost of fertiliser to tho farmers. What happened was that the subsidy had enabled the company to incrcaso its output and thus reduce its overhead costs. He had noticed the previous day that their shares wero quoted at 13s. That was really much bolow their proper value. If their assets wero analysed it would bo sben that their £1 shares were worth 235.