NEW ZEALAND LOAN AND MERCANTILE AGENCY CO.

Otago Witness, Issue 2497, 22 January 1902, Page 10

NEW ZEALAND LOAN AND MERCANTILE AGENCY CO.

MEETING OF SHAREHOLDERS. (From Our Own Correspondent.) LONDON, December 14. At Winchester Housp, E.G., on Thursday the annual meeting of shareholders in the New Zealand Loan and Mercantile Agency Company was held under the presidency of of Mr W. C Dawos. There was a smaller attendance than usual, probably owing to the inclement weather. 1 have already facot you the main points in the directors' report. In moving its adoption, together with the balance sheet, the Chairman referred feelingly to the death of Mr Beaumont, who, though chairman for little more than a year, had from the incorporation of the company m 1894 been one of the mo c t active

members of the board, whose energies were given to make the company a success. After paying interest upon the prior lien and second debenture stocks, there remained, as the result of the year's working, £264, and this bum was carried to the credit of the third debenture stock interest account, increasing that amount to £702; he regretted that the result was not better. At tho last meeting a satisfactory report had bee« placed before the shareholders. The season in the colonies had been good and prices for wool had been high. But with regard to the year under review, the drought had continued during the time with which the present account dealt, and though sinoe then there had been some good rains in the colonies o the spring, they came too late to benefit the figures under review. The latest cable report that had been received^ concerning th? weather in Australia indicated that though there had been good rains in certain parts, other districts had not been so fortunate ; but it looked as if the great drought had at last shown signs of gradually breaking up. The low value for wool this year had had the most effect en the balance sheet.

Last season, continued the chairman, the average selling value of a bale of Australian wool was £8, as against £16 for the previous season; it would therefoio be readily seen what must ha\e been the result of the company's earnings, bearing in mind the fact that their chief profits arose from the pale of wool on commission. These low values had not o»>ly crippled their earning power, but had also increased the charges account. In a bad year the cost of handling wool was heavier than in a good year, for when markets were unfavourable it remained longer in *tore, and extra handling of wool in storPs meant increased working expenses ; it also led to additional temporary storage accommodation having to be obtained at borne of their selling centres in the colonies, and the coot was considerable. The one gratifying feature about this year's wool business was that the company was holding its own as ono of the largest wool-selling agencies. Last spa-on, raking New Zealand and Australia. 103,539 bales were sold in the different colonies, which was a larger quantity than that of any other hou«e This thp chairman considered very satisfactory, as it showed that the company possessed the confidence of wool-growers, and that they had energetic officials who were determined to keep abreast of the times, so that when prices improved they might hope to benefit to an extent not les6 than their neighbour?. It was impossible to speak concerning future wool values : he could only say that the low values referred to continued to go down until March of the present year, when a recovery in the value of merino wool pet in and continued up to the close of the SeptemberOctober series of sales Unfortunately, at the opening of the current series on the 26th ult , a check in the upward movement was experienced, when the lower qualities dropped to the extent of about 5 per cent. For crccsbred wool, which was so largely orrown in New Zealand, the market had gone steadily clown, and most qualities had dropped to a level lower than had ever before been known. Special attention had been given for some time past to the question of an increaseto their business, and in this respect the Chairman mentioned the efforts that had been made to develop further the live stock selling department, where they had increased their commission business chiefly by acquiring one or two old-established stock businesses; but this was clone only after moat careful deliberation, and that they were justified in their action was shown in the fact that they had earned in New Zealand in this respect an increased amount or £11,549, as compared with the previous rear ; and, notwithstanding the low prices that had ruled for sheepskins and other leading lines of produce, apart from wool, then returns showed that the value of produce sold by the different branches in New Zealand amounted to the large total of £1,730.000. an increase of £400,000.— (Applause.) Taking over and conducting these businesses had increased the charges this year very considerably, but to do this it was necessary to engage expert knowledge and first-class officials.

The dairy produce business was another very important and rapidly-growing industry to which the company had given special attention. There was a great field for the further development of this in New Zealand, and in some parts of Australia the company had taken steps by which they hoppd to «ecure a strong position in the trade. In consequence, their charges account had been again increased ; but the directors felt confident that this was a move in the right direction, as the dairy produce business would be one of the chief industries in the future, bo that it was necessary to try and secure a greater hold of the trade. The London wool and produce manager (Mr PatterEcm) had just turned from an extended tour through New Zealand, Australia, and other centres, and good rpsults were looked for from his visit, and the reports and information he had furnished fully justified the expense that had been incurred on account of that visit. There had been a fairly satisfactory business in the frozen meat trade, with an increase in shipments and higher prices on average* than ruled during the previous year. The enormous imports of frozen rabbits, referred to at the last meeting, proved too hpavv for the trade to absorb at price* that paid This year the shipments had been lighter by about 4,500.000 rabbits, and the re c ult had been a satisfactory range of price*. Thp Chairman then went on to say that butter imports from Australasia ahowed a falling off of about 1000 tons, and cheese only a nominal increase. This was attributed to the adverse season in some of the Australian States and to heavier shipments to South Africa. The price for the "finest" buttpr had ruled on average about 4s per rwt higher for the past Feafon than for the pievious.

Turning nf\t to tho balance shepf. the Chairman remarked that the figures were very Mmilar to those in la'-t year's accounti; the liability under debenture stocks had decreased by £2235 on the prior lien and increased by £406 on the second and third debenture" stocks; thp decrease aiosf fiom cancelling an unallotted amount of thp is-sup of £400,000 prior lien stock, and the =mall increase wai on account of claims against the old company which had bepn settled in terms of the schemp of 1894. The other items on the debit hide were only varied by fluctuations of business. Under contingent liabilities, £186,000 odd on New Zealand Land Association's shares, the Land Association was now in porcess of being re-orgamsod, and the pffrct of the reorsr.ani'-ation, if c anctioned by the court, would be that this contingent liability would disappear from the balance <-hept in future. On the credit side of the account

cash with bankers and advances on wool and produce showed a reduction ; the latter item was affected by the quantities and values of consignments in the hands of the company for disposal at a given time. Secured loans and other advances were increased by £110,155; thp advances lepresented by this increase were not of a permanent character, and secured to the company valuable consignment business. Properties and stock belonging to the company had been reduced by £65,459 by sales that had taken place during the year. The company's premises were increased by £13,759, representing outlay in connection with increased stoiage accommodation and the acquirement of premises for conducting the live stock and other branches of the company's business. Dealing with the profit and loss account, the Chairman regretted the shrinkage in profits of £54,817. This was chiefly attributable to the low prices ruling for wool, and not to a decrease in the volume of their business. The increase to charges account was due to taking over and working the live stock businpss, and to other causes to which he had referred. The directors were fully alive to the importance of effecting reductions ; but; in these days of keen competition it was necessary that considerable outlay should be incurred to keep together and extend the business, and it was anticipated that increased piofits would be earned on the live stock and dairy produce business of the company, which would have a favourable effect on the account for the current year.

The Chairman then remarked that it had been the custom of his predecessors to refer to the question of the trustees' certificates. The directors felt that it was not a convenient time to press their views, and that it was better, for a short time at any rate, to leave the question in abeyance ;' but they had not allowed it to slip from their minds. The necessity of dealing in some way or another with these certificates was constantly before the board, and there was no fear of their losing sight of it. Moreover, they werp not without hope of converting some of those who had not hithreto seen eye to eye with ihem upon this point, and if they were successful in thus, it was quite possible that active negotiations might be resumed at an early date. He would say no more on the subject at present, as he felt that any general discussion, of the subject at a public meeting at the present time would be likely to prejudice seriously the negotiations which at any time the board might be in a position to resume for dealing with this important question. Mr Garrick seconded the motion for the adoption of the report. Dr Moody thought a comparison of tho accounts with those carrying on a similar business was somewhat unsatisfactory. The balance sheet of Messrs Dalgety and Co , which he instanced, showed a ratio of expenditure to gross profits of 35 per cent. The expenditure of the New Zealand Loan and Mercantile Agency Company was 53 per cent, of the gross profits. The sneaker then proceeded to refer to the New Z'-alanct Land Association, as to which no details were published. He did not know what the reasons were for carrying on that company as a separate concern, seeing that the whole of the shares and debentures were owned by the Loan and Mercantile. "Would it not be better for the board to arrange for the whole of the assets of the New Zealand! Land Association to be taken over by the Loan and Mercantile? He thought it wa3 a great disadvantage to have a large holding in some subsidiary company of which the shareholders knew absolutely nothing. As a holder of trustee certificates he recognised that some sort of arrangement wag necessary, and some modification should bo made of the arrangement of 1897. For his part he would be- only too pleased to come into line with the board and accept gome equitable settlement.

Mr dimming asked if they would receive information about the trustee certificates before the next annual meeting.

The Chairman replied they would be only too pleased to give all the information possible. Passing on to speak of Dr Moody's remarks, the Chairman said they had tried by correspondence to satisfy him as to the New Zealand Land Association. Nothing that he (the chairman) could say wo\i!d, he was afraid, clear Dr Moody's mind on the subject. Mr Payne would, however, be able to answer anything in regard to that association.

Mr Payne said thp whole matter was very simple. The Lnnd Association had been in existence long before the Loan and Mercantile, and had had to be dealt with as an existing company in which very large stock was held. At that time they had not the whole of the company in their possession. Some £200,000 worth of lebpntuies were hold, and! there was a considerable number of shares held by persons other than the Loan and Mercantile The first concern of the directors under the reconstruction of 1894 was to see that the Land Association asset was preserved That was preserved, and the speaker went, in some detail, into the matter. In 1897 the whole question was exhaustively gone into — not only by the directors, but by the directors in conference with the trustees of the various classes of dehenture stocks. A settlement of the policy to be pursued had then been deliberately arrived at. In reply to Dr Moody's statement as to both the Loan and Mercantile and the New Zealand Land Association doing a similar business, that was not so. The Land Association was an estates company — that was, it held real estate and station 0 , and did not do a mercantile business. All its mercantile bu«inepq was committed to the care of the Loan and Mercantile.

The retiring directors having been reelected and the auditors reappointed, formal business was transacted, and the meeting clospd with votes of thanks to the board and staff.