THE SOUTHLAND FROZEN MEAT COMPANY

Southland Times, Issue 23228, 17 June 1937, Page 9

THE SOUTHLAND FROZEN MEAT COMPANY

, To The Editor Sir, —Nothing could be more ridiculous than the squeal of “Fleeced Farmer.” He writes: “Evidently because of the huge profit the shareholders of the local works are making (37 J per centJ . . . . ” This is simply not true. It is quite true that in 1933 the balance-sheet of the Southland Frozen Meat Company showed a profit of £51,085, but since then the profits have been: 1934 £22,058 1935 £18,117 1936 £13,386

Last year’s profits were not sufficient to pay the dividend of 16 per cent, and reserves were drawn upon. It may be said that even 16 per cent, is a large dividend, but in considering the return regard has to be paid not to the capital but to shareholders’ funds. The war years brought windfalls to the Southland Frozen Meat Company, as to other companies engaged in the industry, but the Southland company was one of the few that built up reserves when profits were large, and the last balance-sheet showed total reserves (including balance at credit of profit and loss) af £196,000, of which £101,500 was invested outside the company’s own business. Including these reserves shareholders’ funds amount to at least £300,000 and the (1936) profit of £13,386 works out at less than 41 per cent. The Southland Frozen Meat Company owes its position today to sound, conservative management and the careful husbanding ot financial resources in good years, and in this connection no one • who knows anything of the company’s history, can forget the work of the late John McQueen. “Fleeced Farmer’s” outburst is just childish. When the company was in financial straits and had to appeal strongly to Southland farmers for support how many shares did “Fleeced Farmer” take up? There were no dividends in those days. On the contrary the company had to raise money by debentures and by mortgage and obtain guarantees for its account at the bank, while its share capital was severely written down to get rid of accumulated losses. It is a safe bet that at that time “Fleeced Farmer” did nothing to help to pull the company through its difficulties.—Yours, etc., HISTORICUS. June 16, 1937.