The Canterbury Frozen Meat Co. Ltd.

Press, Volume CV, Issue 30958, 14 January 1966, Page 13

The Canterbury Frozen Meat Co. Ltd.

, i Chairman’s Statement, to be presented at the Eightyfourth Annual General Meeting of the Company to be held at the Head Office of the Company, 172 Cashel Street. Christchurch, .New Zealand, on Tuesday, Bth February, 1966, at 2.15 p.m., says:

ACCOUNTS OF THE PARENT COMPANY The year’s trading has resulted in a loss of £336,830 which, after allowing for the carry-forward from last year, left a debit in the Profit and Loss Account of £222,402. The amount of £350.000 has been transferred from the Market Fluctuations Reserve and, if the recommendation of the Directors for payment of dividend is adopted, there will be carried forward in the Profit and Loss Account a credit of £61.598.

Shareholders were advised in July that the Directors had decided to change the Annual Balance date to Ist October as being a more convenient date than the 31st October. The change has resulted in a reduction of overhead expenses for this period of eleven months as compared with those for a full twelve months’ period.

Profits of the Subsidiary Companies have been included in the accounts of the Parent Company only to the extent of the dividend received from one subsidiary. The Revenue Reserves show a decrease of £702,830. This is accounted for by the Bonus issue of 300.000 Ordinary Shares of £1 ea:h approved of by Shareholders at the Annual General Meeting held last February, by the loss for the year and provision for recommended dividend.

Additions to Fixed Assets by way of Land, Buildings and Plant are £399,566 before writing off depreciation. Stock at Works, Interest in Consignments Unrealised, and General Stores are higher by £281,248 and of this amount £257,302 is an increase in Consignments Unrealised, the change in Balance date resulting in a greater volume of stocks being unsold as compared with last year. Sundry Debtors show an increase of £40,144 and Trade Creditors, etc., a decrease of are higher by £90,720. The Bank overdraft is higher by £919,925 arising primarily from the higher stocks, and the trading loss. The Debenture Repayment Reserve Investments have been increased by £13,009, this being the Annual Sinking Fund Instalment plus interest on investments already held. The decrease in investments of £3,603 arises from the realisation of shares held in another Company. THE YEAR’S TRADING The close of the 1963-64 season on the London market was unusual and contributed to the over optimistic view taken by producers and all sections of the meat trade as to what trend of meat prices in Europe might be expected in 1965. In the latter part of any year, as Home production comes on to the English market, the normal market reaction is a gradual reduction in price during the August-December period. In 1964 a considerable beef shortage developed in Europe causing prices to rise which drew beef from South America and the United Kingdom, and produced a beef shortage in England in the latter part of the year with consequent price increases. It was thought by some that a higher price level had come to stay. During the past year, beef supplies in Western Europe showed signs of rising and in September it appeared that France, in particular, was likely to have a surplus of beef to export instead of a shortage. Reports indicated that shipments of South American chilled beef to the United Kingdom would be increased and this, coupled with a heavy early kill of Home Killed lambs, produced a decline in the United Kingdom price level at a time when, six months’ previously, there seemed reason to expect a good demand with firming prices.

The Home Killed season commenced during the latter part of August at least six weeks earlier than last year. Heavv supplies of both fresh chilled beef and lamb appeared on all United Kingdom markets almost overnight and indications were that numbers of beef cattle and lamb available for slaughter would be large. However, a prematurely severe winter in Northern Europe has slowed up Home production in Britain and the present market is better than seemed likely a few weeks ago, but this improvement cannot make much impact on heavy losses already incurred. Turning to details of the operations of the Company for the year, the Export Season opened much earlier than usual and we commenced killing at our Belfast and Fairfield Works on the 15th October, 1964. and at our Pareora Works on the 21st October, 1964.

Feed conditions soon became critical and the Works reached their maximum daily tallies before the middle of November. There was heavy pressure for Lamb killings and also for Ewe killings, and by the end of February we had killed 77,000 more Sheep than at the same date the previous year. The number of Ewes handled for the season was higher than ever before and the total killing, as well as the amount of money paid to farmers, was a record. The opening schedule price for Canterbury Lamb Grade 2s 29/361b was 20d plus a premium of 2d per lb com-; pared with Id plus a pre-! mium of 2s 6d per head at, the opening of the previous | season. The 2d premium was incorporated in the schedule

lvalue on November 9, together with a rise of Id per lb in contrast to the dropping ’ of the 2s 6d premium on November 18 in the previous ' season. A comparison at ! November 18, 1964, with the same time the previous year, | shows the schedule for Prime Twos at 22Jd and 19d respec- . lively. There was an increase lon January 11 of one penny jper lb to 23|d and on FebIruary 8 a decline of jd to 23d followed by a further .’reduction in the following I week of id and an increase I on April 5 to 23d after which] (there were various upward (movements to 25id at May ! 3 which remained until the ' season closed in June. The London market which opened at 31 Id ex hooks . Smithfield for Grade 2s at the (beginning of January, fell steadily until early March and during these 10 weeks the decline in price was some . ssd per lb. At this time, there were reports indicating that Argentine Beef supplies were expected to be substantially reduced later in the , year and many buyers com- ■ menced purchasing sufficient Lamb to cover their require- ■ ments for some weeks. This stimulated demand and prices I steaded, then strengthening through March up to the last week in April by approxii mately 2Jd per lb. I Arrivals from New Zealand were still heavy and

stocks continued to climb. The month of May saw a fall in offtake and a build up of stocks in store and by the end of the month, stocks had reached the high figure of 55.800 tons compared with 33.800 tons at the end of May, 1964. Contrary to expectations, the month of June was disappointing, particularly as beef supplies were short with high prices. From the end of April to mid-July Lamb prices weakened. However, some improvement was anticipated, bearing in mind reduced arrivals from New Zealand and this materialised to the extent of lid per lb by mid-August but the stock position remained high—--39,700 tons compared with 14,600 tons at the same date the previous year. By early August reports were being received from lambing areas in the U.K. that there was every indication that substantial numbers of lambs would be ready for slaughter much earlier than in past years. These reports quickly proved to be correct as, by the middle of August, all markets began to see substantial quantities arriving daily and selling at prices below those of New Zealand Lamb. This situation did not take long to adversely affect New Zealand values. Offtake fell away sharply and from mid-August, prices again began to weaken. In September the Home Killed lamb season was fully under way, the price range for these lambs being from 20d to 30d but the bulk about 24d. With the heavy pressure of Home Killed beef and lamb, the weakening values for all grades of New Zealand lamb continued and from mid-Aug-ust to the beginning of October, there was a fall in price for Grade 2s of 3jd per lb.

The number of Ewes killed by us was 25 per cent above the previous season and the schedule opened 3jd per lb higher. It was assumed that market prices on the Continent and in Japan-would be maintained at a level equal to the closing of the preceding selling year. Old season’s Ewe Mutton sold for shipment to Japan was slow in being shipped and sales of 1965 season Mutton were consequently delayed. | There was some increase in (shipments of Ewe Mutton to the United Kingdom because | of the uncertainty in the early (part of the year of sales to (other countries. Over the past few years only very small quantities of light-weight Ewes have been shipped to the United Kingdom bringing fairly high prices. Consequently, buyers there have (switched to alternative types | of meat limiting considerably this outlet for Ewe Mutton. | The Japanese buyers’ ideas of values were well below (those ruling at the end of the 'previous season and for some (time there was no business (done. Our first sale of the year to Japan was made in (mid March and it was not until mid April that we again made sales. Our realisation 1 over the year was some 3d per lb below the closing sales of (the 1963-64 season. The high prices paid for Sheep and Lambs could not be recovered on the falling markets and unfortunately re- : suited in the very large loss ( shown in the Balance Sheet. The past season was the I (first in which Streamlining of (shipping from New Zealand (has been fully effective and as a result, the turn-round of (ships has been improved.

There were, however, very! substantial arrivals of New | Zealand lamb in the early part of the year causing a rapid build up in the United Kingdom of stored stocks in the months February/May and this build up had an adverse effect on marketing The report of the Meat Export Grades Investigation Committee referred to in last vear’s Statement has been released by the New Zealand Meat Producers’ Board. Some alterations to the grading of lamb are recommended. The New Zealand Meat Producers' Board will be carrying out a survey this season to obtain data with a view to the implementation in the 1966-67 season of those of the recommendations which are considered desirable.

The Broiler Chicken Industry in the United Kingdom continues its expansion and for 1964-65 year it is estimated that the output will be 160 million table birds, an increase of over 17 per cent on the previous year. We have continued ours sales promotion in the Pacific! Islands which Mr D. S. San-| derson again visited, and we; have also continued our| efforts in Hong Kong and Japan, The North American market development for lamb has been continued by the Meat Export Development Company (New Zealand) Limited and our Company has played its full part in supplying over 63,000 carcases in the past season. The agreement under which New Zealand has the right of free entry for its exports of meat to the United Kingdom expires in 1967. Preliminary discussions have already taken place ait Government level and it is understood these will be continued in the early months of 1966. From New Zealand’s point of view, it is of vital importance that an arrangement be made to continue the right of free entry of New Zealand meat into the United Kingdom seeing that New Zealand’s farming economy and prosperity has been built upon and is still largely dependent on having the right to continue marketing the maximum tonnage of New Zealand meat in the United Kingdom. The New Zealand Meat Producers’ Board have decided that a new Works is necessary in the South Island and The South Island Freezing Works Investigation Committee was reconvened and had sittings in Dunedin from September 6th to 9th, 1965. This Committee is still making investigations as to the most suitable site and it is anticipated that it will report to the New Zealand Meat Producers’ Board early in the new year. Unsold stocks of Wool at Balance Date are 678 bales less than last year. 74 per cent of our Slipe Wool was sold on F. 0.8. terms in New Zealand and the remainder consigned to the London Auctions. The opening price for Lamb Pelts was 81s per dozen, rising to 115 s and closing at 107 s 6d. Our sales averaged 93s 6d, compared with 84s Id for the previous year. Sheep Pelts opened at 128 s 6d per dozen, rising to 140 s and closing at 130 s. Our sales averaged 132 s per dozen compared with 115 s 9d for the previous season. Seed damage in the Lamb pelts was again high, over 400,000 pelts being downgraded and sold at an average of 14s 2d per dozen below the normal run.

Total lamb, sheep and cattle killings at our three works were higher than those of the previous season. The comparison of the numbers handled is:—

The average weights of lamb were 29.391 b per carcase compared with 30.651 b for 1964, wethers 46.651 b compared with 47.671 b, and ewes 44.71 b compared with 48.311 b. The total payment to our clients for all stock killed in 1965 season was some £6,030,000. EXPENDITURE AT WORKS Capital expenditure in the last four years has been as follows: —

MAJOR WORK CARRIED OUT DURING 1965 BELFAST: Lengthen slaughterhouse and install two moving legging tables and chains. Rebuild dressing and dining rooms which were demolished to enable slaughterhouse to be lengthened. Cover sheep yards (not completed). Build new fat saveall of larger capacity. Install two new lime dollies in Pelt Department and extend the pelt conveyor to suit. Convert one fat extractor to electric drive (two more to be completed). Install head splitting machine for the removal of brains. FAIRFIELD: Install two moving legging platforms and chains for No. 1 and No. 2 dressing chain.

Complete installation of sterilising equipment | Install condemned carcase conveyor and re-arrange chutes from slaughter floor. Roof on sheep yards completed. Continuation of work on Trades Block. Re-insulate south section of lake side stores with cork insulation and direct expansion pipe in stores with provision for blast freezers above (not completed). ' Dismantle existing earthenware defrost water drains and renew in steel pipe. I Enlarge pump house to provide space for future general service pump. Install new 850 gallon acid storage tank. Build two new lime dollies (to be installed). Install 193 tube shell and tube condenser, liquid receiver and new condenser pump. Install foundations for new 9x9 ammonia compressor and motor. PAREORA: Lengthen slaughterhouse and alter existing roof in two locations. Alter bleeding ramp and bleeding conveyor. Provide new amenities in slaughterhouse block to replace those demolished in lengthening slaughterhouse. Install three moving legging platforms and chains. Continuation of the reinforced concrete building for new store and blast freezers with additional cooling room floor space west of present killing floor. Continue work on Boning Room and alumiseal insu-

lation. Install steam heated beater shafts in two Iwels, install five automatic discharge perculators with screw conveyor. Convert four fat extractors to electric drive, install cake breaker for fat extractors with elevator and screw conveyor. Install Alfa Laval tallow sepa-

rator. Install one skin wash dolly in felmongery and new hydro extractor, renew drives and extend conveyors to suit. Install one hew lime dolly in Pelt Department. Install 7in x sjin 8 cylinder ammonia compressor and motor. Commencement of buildings for additional transformer and electrical extensions. Re-arrangement of rails in Freezers Nos. 3,4, 5, 10, 11. Two 100 ft Belt conveyors in new store (not yet installed). Survey complete for proposed infiltration gallery pump houses and chlorine contact tank for main water supply.

Major work has been done to bring the Works into line with the Meat Hygiene requirements and more still has to be faced. To meet the ad-

ditional expenditure necessary a Term Loan has been arranged with The National Bank of New Zealand Limited. The estimated cost of this work is £700,000 of which £300,000 has already been spent. Apart from this, there is heavy expenditure ahead for expansion of killing facilities to cope with increased stock as it becomes available.

We propose expanding Belfast capacity to 7,000 Lambs daily in 1966/67 and between 1968/1970 to 16,000 Lambs. At Fairfield we are now reinsulating a Cold Store and renovating and re-arranging freezing rooms which will enable us to increase our daily kill from 8,000 to 10,000 and between 1967/1970 we propose installing a further chain and enlarge ancillary departments to bring the daily kill to 14,000 Lambs. Work has been done at the Pareora Works to bring the capacity from 9000 to 10,000

daily. Work is continuing on the new Cold Store and additional freezing rooms and cooling room. Between 1967/1970 we propose a further enlargement to the slaughter-house jto enable the daily Lamb kill (to be increased to 14,000. This will require additions to the fellmongery, pelt department, dry rendering department and so on, and work is continuing towards the building of a Beef Plant. With all these extensions, we will also have to build i amenity blocks for the additional men -who will be required for the processing of the higher kill. HEAD OFFICE PREMISES The Head Office staff at present occupies space in three different buildings and in order to bring the staff together, the Company, in conjunction with Williams Property Developments (Canterbury) Limited, has purchased the Ashby Bergh property in Cashel Street. A modern office building will be erected thereon. The Company will occupy six or seven floors, and the balance will be let. The Head Office premises in Cashel Street have been sold. DISTRICT LAMB COMPETITION Export Lamb Competitions were held under the auspices of the various Agricultural and Pastoral Associations at Belfast Works on 27th November, 1964, Fairfield Works on 19th November, 1964, and Pareora on 26th November. 1964, entries totalling 366 lambs, 252 lambs and 306 lambs respectively. All the Competitions were well supported by the attendance of many farmers on the various Competition days. SHIPMENTS ON FARMERS’ ACCOUNT

There were 226,000 Lambs shipped on consignment through our Pools. We are glad to give all facilities and service to farmer clients who wish to dispose of their stock in this manner. NATIONAL SAFETY ASSOCIATION AWARD OF MERIT

On 11th May, 1965, Mr A. S. Farrar, Chairman of the Canterbury Branch of the National Safety Association, presented the National Safety Award of Merit to the Fairfield Works. Mr R. F. Aitken, Director of the Association who attended, said the Award was the twenty-first presented and only the second to the freezing industry, the first being to the Company’s Works at Belfast. Credit for the good safety record at Fairfield must go to the Second Engineer, Mr H. Vartha, the Works Safety Officer, and Mr D. Cox, the First Aid Officer, as well as to all employed at Fairfield for their co-operation. A telegram of congratulation was received from the Prime Minister (Mr Holyoake). STAFF The death occurred on 17th April of Langford Park Symes, Chief Chemist of our Works. He joined the Company in 1896 and was actively engaged until the early 1960’5. After he ceased active work, his wide experience and knowledge were always available and most valuable to the Company. He maintained his interest until the time of his death. I cannot do better than quote from the September issue of the Company’s Journal:

“The death of Langford Park Symes on 17th April closed a full life that was as profitable to his wide circle of friends as it was to himself.. “A practical scientist, he had an observant eye and an inquiring mind that sharpened to a knife-edge his faculty of active and logical reasoning. From these qualities emerged a sense of sympathy which enabled him to attune his own line of thought to that of his hearer. This rare sense, coupled with a rapier-sharp wit, made him an interesting and charming conversationalist. “His colleagues join with his family and his numerous friends in mourning the loss of a remarkable man who devoted a great part of his life to the betterment of the meat industry and has left a void that cannot easily be filled.’’

Mr S. A. Chisholm retired from the Board and the office of Managing Director of our Subsidiary, The Canterbury Frozen Meat Company (London) at the end of August. He held this appointment since 1958 when he retired as British Representative of the New Zealand Meat Producers’ Board. His knowledge and experience was largely responsible for the reorganisation and efficiency of our London Subsidiary after the return to private trading. Mr D. Lusby, London Sales Manager since 1959, took up the position of Manager of this Subsidiary as from September 1, 1965. The Secretary of the London Subsidiary, Mr D. Morten. is returning to New Zealand and Mr G. A. Northccte, recently Manager of our Belfast Works, has been appointed to succeed him.

Both Mr Lusby and Mr Northcote have been appointed to the London Board. Mr T. W. Polson, formerly Purchasing Officer at Head Office, has been appointed Works Manager at Belfast replacing Mr Northcote. The Head Office Engineer, Mr E. C. Hartridge, has retired after 20 years’ service and Mr A. H. Henry, Chief Engineer. Belfast, has been appointed Superintending Engineer to the Company. Mr H. M. Finch, Second Engineer at Belfast Works, has been appointed Chief Engineer at Belfast. The thanks of the Shareholders are due to all the staff for their work during the last year. P.B.A.

1965 1964 Lambs ,. .. 1,990,320 2,010,512 Sheep 476,595 375,726 Cattle 20,627 20,011

BELFAST WORKS Land and Year Plant Buildings Total £ £ £ 1962 21.466 109,283 130,749 1963 39,464 102,257 141,721 1964 51.260 116,400 167,660 1965 46,232 70,531 116,763 Total .. .. £158,422 £398,471 £556,893 FAIRFIELD WORKS Year Plant Land and Total £ Buildings £ 1962 8,693 76,043 84,736 1963 31,860 89,158 121,018 1964 36,553 60,613 97,166 1965 15,557 74,512 90,069 Total £92,663 £300,326 £392,989 PAREORA WORKS Year Plant Land and Total £ Buildings £ 1962 46,294 66,576 112,870 1963 52,583 59.651 112,234 1964 35,015 100,007 135,022 1965 59,473 133,213 192,686 Total 193,365 £359,447 £552,812 SUMMARY OF FOUR YEARS’ CAPITAL EXPENDITURE AT WORKS Land and Plant Buildings Total £ £ £ 1962 76,453 251,902 328,355 1963 123,907 251,066 374,973 1964 122,828 277,020 399,848 1965 121,262 278,256 399,518 Total .. £444,450 £1,058,244 £1,502,694