RECKLESS TRADING.

Taranaki Daily News, Volume LII, Issue 187, 11 September 1909, Page 3

RECKLESS TRADING.

LOVELL AXD CHRISTMAS AS CRITICS. WHO SPOILED THE PRODUCE MARKET? At the fourteenth annual meeting o" shareholders' of Lbvell and Christmas, Ltd., held in London on 10th July, the chairman, Mr. o.'"Lovell, said that ■while he thought the. proposed half-year's dividend iit the fate of B per cent, per annum on preference shares and 8 per cent, on ordinary shares, making 7 per ce;it. for the year, was not a result to he ashamed of. yet it was not altogether satisfactory to the directors, who had hoped to he able to show a better result. The past year, however, had been one «! almost unexampled difliculty in the pro. vision trade. Those gentlemen present who were engaged in that business would know that this was absolutely correct. A year ago the directors had hoped that the period of reckless trading was -nearly over, hut that hail not proved to be the case, and profit-making during the past year probably had been more difficult than at any previous period. Hign prices in the colonics ha-i to be paid to procure the usual supplies, and wnen those goods came to hand in many instances the nrices realised did not cover the actual cost. A FAILURE AXD ITS SEQUEL. Well, the contracts for these supplies had hardly been concluded when a failure took place in Britain of a large j company that was doing an important business, and possibly that company was responsible to a very large extent for the high prices that had to be paid r.i the colonies for tie goods. At any rate, in their fall they brought down others, and during the time that the liquidation was going on it was almost impossible ;o sell goods in London at a profit. There (continued Mr. Lovell), in order ;o hold your customers, you had actuillv to sell at a loss, and this continued [or some considerable time. One large itorc—Bell's Stores—was indebted to the company that failed to the tune ol some £40,000. They were unable to meet their engagements, and, of course they were brought into liquidation, and at a time when apparently they were about to recover their position. We, ir common with others, had supplied thes< stores for a great many years, and .v< suffered a considerable loss. What : should term our general bad debts dur ing the year have been, as usual, cov ercd out 'of the profits of the year, hu' with regard to Bell's Stores we havi taken the loss and the depreciation m some of the investments out of the deb reserve fund. Speaking of that rcserv. fund, and going back to the year 18i>(1 when the original business of Lovell am Christinas Was handed over to the com ranv. there was a reserve of som .t'SIiOII. During the years that hav piiK-cd that fund Has been augmented until in- the accounts of last year l stood at something over £51,000. \Y have always looked upon this as som( what in the light of an insurance fun against any contingency that migll arise, such as has arisen now, and tlurc fore we think that it would have lice unjust in this one year to have depriv the shareholders of a dividend when w had that fund in existence, b fact, take it that there would have been k reason for such a fund if we could no use it 071 such an occasion as this. JXCREASIX« TRADIXG PROFITS The figures in the accounts will <no< you that the trading profits for the yea are some £IBOO more than last yeai Horses, carts, and vans have increase somewhat, but we are now beginning t use motors, and we had to increase ou stable accommodation and provide nior horses. All those articles arc writte down to. I might almost say an absurdl low figure—certainly to an amount la less than thev would realise if soli Stock-in-trade is some £7OOO or £Bou more than last year, and most of thu stock—which 1 may sav in passing ha all been written down to the lowcs market value—was held in the north i articles that London does not deal » much in. Our northern branches hav to hold larger stocks, because they dea in various sundries which we do no touch in London. 'Book debts are onl c £IOOO more than last year, while th ! investments are nearly £1*2,000 mort 1 should flke to explain that the invest ments there mentioned consist princi pclly of debentures that we hold as [irst charge upon some butter faetor.e in the Argentine. ,We sell their good; and those debentures are redeemable a from £IOOO to £2OOO each year. A long as we hold any debentures in thos companies we have the sale of their pro duce, and we have received one instal ment since this meeting was called oi account of those debentures, which ar to be paid off annually. Cash in ham is some £25.000 more than last year. SPECULATORS STEPPED IX. I spoke a few minutes ago about th prices that were paid for goods in Xev Zealand and the prices here. It wii explain 'to you, perhaps, the we have had to encounter when I lei you that when the contracts were beinj made in August and September of la.year speculators stepped in, and to i great extent spoiled those of us win are in the regular business; our com potitors paid as much as ll'/id urn ll'/ad for the butter in the factories and whe n that butter arrived here ii the full swing of the business of tdi first three months of the year it wai being sold in London at less than tin actual cost before it left the factorici in Xew Zealand. Very much the sami thing occurred with regard to cheese. : merely mention these things to cnnbli you to understand the difficulties \vi have had to encounter during the past year. The plcasantest thing I ca n speak tc you about is the very large increase that has been made in the volume o our business. We have had a bigger in crease in tltc past twelve months that in any previous period, and if wc hat realised anything like a fair percentage iof profit we should easily have sltowr 'you from £IO,OOO to £15,000 mor<S nel

profit; but the adverse circumstances I have told you of to a very large extent' spoiled su. MONEY-MAKING WAS HARD WORK. But whatever may be the result shown in the balance-sheet, I may tell you that money was never more hardly worked for than it had been in the last -twelve months. Speaking about the reserve and investments, 1 wish to be quite candid with you—all those investments are not written down to tisa very lowest rock bottom, but they arc paying, and during the past year they returned to 'us—a good many of them are debentures—4l/, per cent., ant may yet recover (heir original value. Our accountants advise us that the reserves we have arc ample to cover any deficiency. Von will notice we propose to carry forward £28,807. You will, of course, notice that the directors' remuneration amounts to nothing unless we pay yon S per cent., and as we did not feel that we were justified under the circumstances in paying that 8 pe reent., the matter is in your hands.

Tlffe OUTLOOK. l 7 ou might ask me, perhaps, to say something with regard to the future. Well. I do not like to prophesy in these

times. I can only tell you that we coisidcr that we have a splendid business, and that we have retained the Full confidence of our customers—never more so; and. further, there is one feature in the business, that prices look like being lower during the coming season than in the past two or three years, and I feel pretty confident myself that the mad spirit of competition which has been prevailing'for several years has received a severe set-back during the I'asl. twelve months. I am hopeful, as 1 was last year, but I do not like to say too much on the point. Mr. C. E. Nuthal) said he was sorry that those who sold goods at a loss and did themselves and the trade an injury did not join together or arrange between themselves to sell at some sort of profit. Selling at a loss seemed to be very unbusinesslike. ' The chairman, in reply to questions, stated that the amount taken from the debt reserve fund was between £25,000 and £30,000. Directors of New Zealand dairy factories who are plodding along 011 a modest 10s a, day (with id>e lime knocked off) will be interested '.u learn that shareholders voted the l/jvcll am 1 . Christmas directors the titlv sum of £3OOO.