DALGETY AND CO.

Star (Christchurch), Volume LXVI, Issue 20503, 3 January 1935, Page 9

DALGETY AND CO.

Fiftieth Annual Meeting Held. CHAIRMAN'S ADDRESS. (Special to the “ Star.”) LONDON, November 23. The fiftieth annual general meeting of Dalgety and Co., Ltd., was held yesterday at 65, Leadenliall Street, E.C. The Hon Edmund W. Parker (the chairman of the company) presided. The chairman, in the course of his address, said:— Trade figures continue to be very satisfactory, and for the financial year ending 1933-34 exports exceeded imports by about £39,000.000 which, after providing for close on £27,000,000 for interest on external loans, leaves a substantial surplus. This brings me again * j *l ues tion of exchange. When addressing you last year, I referred to rate operating as between here and Australia and New Zealand, and to the detrimental effect it was having on the company’s earnings. My remarks met with some criticism from our friends overseas, but I was speaking to you as shareholders, and it is mv duty to draw your attention to any factors which affect the company’s earnings, j-he rates of exchange in operation today are materially the same as they were a year ago, and there seems no immediate prospect of any change, bince the marked depreciation of the Australian pound in 1931, and the subsequent depreciation of the New Zealand pound, the cost of remitting funds on< J° n or t * le general purposes of the company has reached the large sum of £304,814. Until the year under review to-day, that is, the year ending June 30 last, this burden was met by u j USG son * e reserves which had been provided in more prosperous years. I am glad to say that for last year the cost, which totalled £102,000, was met entirely from current earnings, and thus obviated a further reduction in our internal reserves, which I want to see built up again. I do not want it to be thought that in this matter I am criticising the exchange policy of either the Commonwealth Bank or any other overseas authority. I realise that this depreciation of the pound has helped the primary producer, and tne help afforded him has reacted favourably on the earnings of the company for services rendered to its clients, and therefore the £102,000 which has been spent in remittances cannot, in its entirety, be regarded as “ i? SS ' a- There is, however, this difficulty: The company’s capita! has been largely invested in the financing of our clients properties. This money has been borrowed here and remitted overseas at the par of exchange, or at small margins of difference. The interest rates obtainable on these capital sums have been reduced of recent years, both compulsorily and otherwise, to such a figure that they are equivalent, virtually, to the borrowing rate here, and have therefore ceased to be profitable. This is a burden to the company, and affects profits adversely, and it is a burden which we may expect to remain with us for some time. I need hardly add that we are doing all we can to lighten it by endeavouring to extend our earnings in other directions, especially are we endeavouring to extend our already considerable merchandise business. Operations in New Zealand. I will now say a few words regarding and our operations in New Zealand. Internal conditions have improved considerably, as, like all countries which are primary producers and have few secondary industries, New Zealand has responded rapidly to the better selling prices for her exportable products. Trade figures show a great improvement. The expert surplus for the twelve months to June 30 last was £22,500,000 in New Zealand currency, against £12,000,000 for the preceding year. This means an accumulation of sterling balances in London which is more than is required for external interest payments. Here again the question of exchange becomes involved. There has been no alteration in the telegraphic transfer rate since last year, but. after the opening of the new Reserve Bank, which maintained the carded rates, the trading banks slightly reduced their rate for bills of certain usances for commercial purposes. The Government, through the Reserve Bank, has announced its intention to maintain the present rate for an indefinite period. As to our own operations, I am happy to say that more satisfactory results have been shown by the New Zealand branches at practically every centre. has been brought about by many of the accounts working themselves into a better position, and ‘ it has been found unnecessary to take such large sums as had been anticipated from profits to support them, the improvement, of course, being due to the rise in wool and meat prices. Values of dairy produce unfortunately still remain on a very low level; in fact, prices in comparison with the previous season were more disastrous to the producer. I commented last year on the burden which the New Zealand farmer was bearing in the shape of arrears for rent, rates, taxes, etc and I am glad to say that, although there is still a lot of leeway to be made up. the situation ,'s easier, and many of these arrears have been overtaken. I hope the present year will see a further movement in this direction. New Zealand, then, can be said to have played its part well in assisting the better results which we are able to lay before you this year. Summing up. the result of our operations for the year is that, after providing for bad and doubtful debts, current expenses, depreciation, debenture interest and taxation and all continl*le net profit amounted to £107,0*4 16s 9d. After adding the balance brought forward, £131,902 15s lid and charging the twelve months’ dividend on the 5 per cent preference shares. £25,000. and the interim dividend paid last May. £37,500. there remains at the credit of general profit and loss account a balance of £176,977 12s Bd. which the directors recommend m payment of a fioal dividend on the ordinary shares of 2s 6d per share, free of British income tax. making, with the interim dividend. 5 Pfon n * p sf an num, and leaving £l-9.47* 12s £>d to be carried forward.