EXCHANGE BENEFIT

Wanganui Chronicle, Volume 76, Issue 181, 3 August 1933, Page 3

EXCHANGE BENEFIT

COMPANY GAINS £3120. NEW PLYMOUTH. Aug. 1. How the Hawera Dairy Company gained over £3OOO through anticipating the increase in thc exchange rate was disclosed at the annual meeting of tho company. The chairman (Mr. J. R. Corrigan) said that the company had taken advantage of its financial position in handling London funds to the best advantage. The auditor (Air. T. E. McKenzie) in his report, explained how tho company had made an additional £3120. For some time prior to the increase in the rate of exchange in February tho directors. in anticipation of the increase, adopted 'the policy of drawing only amounts varying from £1 to £2 10s per crate on cheese shipments, in lieu of the full drawing rates allowed by the agents. In addition, certain f.o.b. sales were made, subject to payment in London. This change in policy resulted in a largo accumulation of funds in London, bearing interest at thc rate of 5 per cent., and necessitated additional accommodation from the bankers in New Zealand in order to finance tho monthly butterfat payments. Thia accounted for an increase of £266 in interest. Immediately following tho increase of 15 per cent, in the exchange rate, thc London funds were remitted to New Zealand, thc company thus obtaining the full benefit of the higher rate. The actual net profit to the com pany on these exchange transactions, after making allowance for additional interest through short drawings, war approximately £.3120. In 1930 advantage was also taken by the directors of tho disparity between the Australian and New Zealand rates of exchange on London, and this resulted in a net profit of £2OBl. The secretary (Mr. Duncan) said that the present exchange was worth almost 3d per lb on butterfat with cheese at 50s. With the exchange at par 50s was equivalent to a payout of 7.7 d, but with tho exchange it was 10.67 d.