THE Southland Times PUBLISHED EVERY MORNING. Luceo Non Uro. SATURDAY, FEBRUARY 13, 1909. THE SOUTHLAND FROZEN MEAT COMPANY.

Southland Times, Issue 14032, 13 February 1909, Page 4

THE Southland Times PUBLISHED EVERY MORNING. Luceo Non Uro. SATURDAY, FEBRUARY 13, 1909. THE SOUTHLAND FROZEN MEAT COMPANY.

The annual statements to be submitted at the meeting of shareholders of the Southland Frozen Meat Company to-day are, in the circum-

stances, documents which afford no cause for complaint or lamentation. It is true that the profits are not so large as those shown last year, but then last year was the best in the recent history of the company, and in such a concern as a freezing company vigilance and enterpirse on the part of the management will not. always counteract adverse influences over which neither the management nor the shareholders have any control. The report docs not say which branch of the operations carried on by Hie company is responsible for the shrinkage in profits, but no doubt the chairman of directors will have something to say on the point at today's meeting. Despite the reduced profits the directors are able to recommend the pa) meiU of a 5 per cent, dividend and a 1 per cent, bonus on both A and B shares, thus giving

shareholders a return on their investment equal to Unit of last year. They are also able to make a substantial increase in the reserves and to set aside an adequate allowance for depreciation. In order to show con-cis>-ly how the balance sheet just issued compares with those of the past few years we have taken the following figures from the balance sheets of the company:

Added to Profits Div. Res. Res. £ £ £ £ 1899 1546 nil 4000 4000 1900 nil nil -1000 1901 1212 nil 4000 A B p.c p.c 1902 8135 2M; 5 1601 6000 10,000 1903 6852 2K 5 1580 5000 15,000 1904 5808 2% 5 1697 4000 19,000 1905 3976 2Vi 5 1767 3000 22,000 1906 8135 4 5 2065 4000 26,000 1907 10,991 6 6 2711 8000 34,000 1908 7437 6 6 2713 4000 38,000

Nolo.—The G per cent, dividend of i:u»7 like that now proposed consisted <<f r» per cent., with a bonus of 1 per cent. The Southland Frozen Meat Company has fairly established itself as a divi-dend-paying business, and the directors are fully warranted in paying the same dividend as last year, even though the available profits wore £3500 less. The shareholders are now reaping the benefit of what might bo called the conservatism of the management in past years, when the profits were used rather to accumulate reserves than to pay dividends. With this year’s figures added, the balance sheets since ISO 9 show aggregate profits of £51,334, of which only £14,13-1 has been distributed among the shareholders in the form of dividends. The rest of the money lias been allowed to accumulate in the form of reserves, which have been applied to the enlargement and improve'ment to the company's property and plant, so that the company now has a property valued at £103.927, as compared with the valuation of £73,705 in 1900. Had the directors been as lavish with their dividends as they might have been they could not have made the substantial additions to plant and buildings of past years without calling up fresh capital. Still, now that the handsome sum of £38,000 (or, including the £2OOO held in reserve for insurance purposes, £40,000) has been reached a 6 per cent, return for this year is fully justified, and does not lay the directors open to any charge of forsaking the policy of safety and caution which has characterised their management in the past. For some or other of its enterprises during the year the company has found it necessary to increase its outside liabilities, i.e., liabilities in the form of debentures, mortgages, and overdraft which are due to outsiders as distinguished from the shareholders who

subscribed the capital of the company. Since 1900 these liabilities have fluctuated as follows: ■ 1900 £35,590 I*ol 94,640 1902 33,559 1903 29,827 1904- 26,592 1905 29,625 1906 23,914 1907 25,597 1908 ■ 34,094

The increase shown In 1908 has taken place in the bank overdraft. At the beginning of tbe year the debit balance at tbe bank was £621, and during the twelve months this increased to £B67B—an increase of £BOOO. The other items have remained practically stationary. The amount owing on debentures Is still £17,800, mortgagbs at £3OOO are unchanged, and sundry creditors claim £4616 as compared with £4146 a year ago. The increase of £BSOO in the outside liabilities of the company, therefore, is explained by tbe addition of £BOOO to the bank debt and an increase of £SOO in the amount owing to creditors. The increase in these liabilities is offset by increases of £BOOO in the value of the property, £ISOO in stocks and stores, and £3315 in sundry debtors. This last item suggests that the company has perhaps found it necessary, like other firms, to give some of its customers time to pay. The tightness of money has been felt by all classes, and it may be that the company has found it necessary to draw on the bank for moneny that would in more favourable times have come in from their debtors. Of course that is only a possible explanation of the heavy bank overdraft, which may be due to other reasons altogether, but the -fact remains that the book debts of the company now amount to £10,575, as compared with £7260 last year. A very important item in such a balance sheet as that of the Southland Frozen Meat Company is the provision made for repairs and renewals and for depreciation. For the sake of comparison we have extracted the following figures from the company’s balance sheets since 1900: Total Depre- Spent on Value elation. Repairs. 1900 £73,765 £2562 £9Ol 1901 73,534 1500 779 1902 72,707 2100 788 1903 75,156 2180 SOI 1904 78,015 2000 1189 1905 83,918 2000 1127 1906 85,929 2000 964 1907 95,980 3580 4192 190S 103,927 SSS9 .1403

Since 1900 the value of the company's works, including land, buildings, machinery, and plant, has increased by £30,162, and at the same time £24,500 lias been written off by way of depreciation, and £12,1-14 has been charged against profits for repairs and renewals. East year the company made the highest allowance with regard to depreciation, but the expenditure upon repairs, though above the average of the past nine years, was £2789 less than that for 1907. The total of the items for 1908 was £7292, as compared with £7772 for 1907. There was a time when the balance sheets of the company were open to criticism in respect to this item, but the provision now being made appears to be ample, and represents a satisfactory per centago on the whole property of the company. The management has always exercised very particular supervision over the expenditure on repairs and renewals, and all expenditure of a kind which has not provided a tangible and permanent addition to the assets of the company has been rigidly charged against profit. This policy, combined with the provision made for depreciation, should give shareholders the fullest confidence in the valuations which appear in the balance sheet. Taking the position as a whole, the shareholders have every reason to feel

satisfied with the operations of the year. Considering that 1908 was unfavourable to trade in all branches, the Southland Frozen Meat Company has done well by its shareholders, and the management has earned a renewal of the confidence it has so long enjoyed.