EGMONT BOX COMPANY.

Taranaki Daily News, 27 August 1919, Page 6

EGMONT BOX COMPANY.

ANNUAL MEETING, The thirteenth annual meeting of shareholders of Hie Egiunnt Box ComDany was held at Eltham on Tuesday, when Mr. Arthur Morton, chairman of directors, prrsldor?, and there wore also present: Messrs. It. Spratt. W. D. Powclrell, J. Brown, ,T. S Cotinott, and J. Wooldrldgo directors, and about 40 representatives of shareholding factories. REPORT AND BALANCE-SHEET. Tlio report stated that the result of the year's operations was very satisfactory, tlio mission £l2O 4s M. The principal items improved during the past year. Substantial sums had been written off on account of exhausted bush, abandoned tramways and for depreciation of the company's buildings and plant. After making ample provision for these requirements there remained to be carried forward a balance of £540 12s 2d. The balance-sheet showed receipts to have been: Timber, butter-box and clieeso crate sales, less purchases £58.161 5s lOd, commission £126 4s sd. The principal items of expenditure were: Wages £20,765, maintenance and repairs £3471, fuel £llO4, freight £11,270, interest £1937, tramway maintenance £IBO4, salaries £lOlO, horsefeed £2OB, accident Insurance £5lB, fire £635, nails and lashing £570, oils And files £407, rates £503, ront £434, royalty £l7O, land and Incometax £221, discount £587, travelling expenses £195, exhausted bush £1295, depreciation £10,083. There was a balance of net profit £546 12s 2d. CHAIRMAN'S ADDRESS. In moving the adoption of the report and balance-sheet, the chairman briefly explained that his occupation of the position of chairman was only temporary, end was due to the chairman (Mr. .1. B. Murdoch) being one of the two delegates to visit America and make investigations into various matters of Importance to the dairying industry. Continuing, Mr. Morton reminded shareholders that when they met 12 months ago the position regarding supplies was a very serious one. During the year the directors wero faced wiith considerable difficulty in maintaining supplies owing to the shortage of labor, also because they were working further from the mill and It was not possible to haul so much dally as previously. They were also faced with the same difficulty in purchasing timber. This reduced the output very much, wilh the result that they were unable to supply shareholders' requirements in the way they wanted to. To-day the prospects were much brighter than ever before. They now held at Eltham and Ohutu very large stocks. Tho curtailment, of the railway service was affecting their outside purchases, also the output at Ohutu, but he hoped that this would be»only temporary. They had large supplies of box and crate timber at Eltham and unless anything unforsecn happened, they would doubtless be able to keep factories supplied. They did not rut hulMing timber themselves as they we.*, not into that class of. bush, but in order to meet the requirements of their customers, tfcey had to purchase large quantities from mill 3, and they had fortunately rcccrved largo stocks just prior to the railway cut, thereby being enabled to meet the requirements of their customers as far as possible. The fact that they expected their future of bsitdlng timber to be profitable, and that they proposed to purchase the timber from the Tongarlro Company, made It imperative that they should establish a connection for the sale of building timber, which would make It more profitable to work the white pine. The position regarding the procuring of white pine had been made much better than appeared to be likely twelve months ago, when they had to meet Australian competition that had grown stronger year by year, *nd had got to such an extent that It practically threatened the existence of the company that had to depend on Its requirements from outside mills. For year past the flnrs-rnmont bad been urged to put some restriction thereon, but It was regarded as hopeless that they would do so. However, they had at last recognised the seriousness of the position and thrqugh the Board of Trade had made regulations restricting the export of whito pine. These regulations had been of material assistance In enabling the company to obtain supplies of white pine for some years to come. He touched on the proposal as laid beforo shareholders at a special meeting to purchase a large area of white pine timber, and stated that acting on the direction passed at that meeting the directors were negotiating to purchase the timber, and while negotiations were proceeding satisfactorily it would be some time beforo finality would he reached. Since the meeting, an Inspection of the area had been made by one of their men, and fully bore out tho opinion expressed by the directors that it was an exceptionally fine , block of timber, though it was Impossible to approximately estimate the quantity. It was, however, considered the bush contained over SO.OOOJIOO feet of white pine and tills, the chairman considered, fully justified the action of the directors. Every care, lie said, would bo taken to protect the shareholders' interests. Tho balance-sheet was a very satisfactory one. The profit made during the year had been a very substantial one, and tho directors had taken advantago of that to write down very largely the banking assets of tho company. In dealing with the saw mlllhin i.isinoss they were dealing with something very different to what . thiy had been acustomed in the dairying industry. Each year they cutso much timber and their assets were correspondingly reduced. Furthermore, In developing the bush and providing access they must spend large sums of money. If this money was capitalised soon or later provision must be made for depreciation. The Ohutu tram, he pointed out, as tho result of continual extensions as the timber got further from the mill, stood in the books at £18,840. Several years ago be had pointed out tho necessity of establishing reserves, so that by the time tho timber was cut out tho reservo would be able to wipe out the cost. They had set aside £3400 as a reserve-fund, and intended from time to time, to increase tnat sr*n-rve. Referring to Increased taxation, he said they . had this year placed the position before the Income Tax Department, and had been met frankly, with tho result that substantial depreciation on the tram and bush accounts had been allowed. It was estimated that the Ohutu bush rights would bo cut out' in three years, and they had therefore written off one-third depreciation on £6BO, so that by the time the bush was worked off the asset , would disappear off the books. In the Taurewa hush they had written off an amount of £615. equal to royalty on the exhausted bush, and an additional £770. On the Ohutu tram they had written off £5246. which was one-third of the value after taking into account the value of the steel rails, etc., which would be an asset. Taurewa tram had also been written down by £ISOO That they had been able to make profits amounting to £11.300 this year, he considered spoke well for the good management of the directors, who had exercised good judgment ' In the way they had utilised those profits. He pointed out also that the mortgage account at. Taurewa had been reduced by £IOOO, and their liability to the bank had also been reduced since, tho balance from £20,000 to £15,000 Stock In hand showed an increase from £5876 at. the last balance to £22.189 this, and It had been put down at less than It cost. In connection with Ohutu, they had sold out leases as the timber rights had been cut. Since the close of the year they had arranged for the sale of ono more, which would practically wipe out the item of £1550 teasehold properties. At Eltham. they had purchased a property adiolnlng tho yards with a cottage thereon. This would give them a quarter acre additional timber storage accommodation, and would also provide a suitable cottage for one of their employees, the , interest on the purchase money being more ' than met by the rent of tho cottage. They might have to makei some further provision in Eltham for housing their employees, In common with the policy that other companies had 'to adopt. "Regarding Interest, he stated that in the past,lf had been the practice to eapltallso the interest -on th* Tawewn nrnner'v This year"the whole had been charged to the interest -account with the result that It allowed an increase from £682 to £l9Ba. Wages had gone up considerably, being a record ono in the history of the company, and ho would not say that even to'day they had reached the highest point. This vear they were £20.765. as a.galnst £15,443 .the previous year, and that despite the fact that they had not employed as many mon, : . Freights bad jumped from £4895 to £8256, white pine now boing carried. on the same basis as building timber, whereas formerly it had an advantago of Is per 100 feet. He then read the auditor's supplementary report, which was very congratulatory to the secretary and staff to whom also the chairman paid a high tribute He also touched on the cordial relations that existed between the directors and the staffs of the mills, who bad worked in the interests of the company and had spared no pains in their work, it was therefore only due to them that he should mention the matter. Mr J. S, Connett, in seconding, said be considered the prospects of the Box Company were never brighter than they were at the present time. THE DISCUSSION. In reply to Mr. Power, the chairman stated that £OO.OOO would probably cover the depreciation written off. Mr. Power held that a reserve fund should have been established so as to wipe out the wasting assets of the company, and make provision for the purchase of new bush as the company's bush was cut. out. The chairman explained the position of the ■ Taurewa. block, which contained valuable milling timber, not white pine however. It . would be some time before they would be In a position to mill this. He could not give an estimate of the quantity of timber In sumb* »• It wu in two distinct imt "

the profits were the wnne for Hie nevt two years as in the oast year, unit the directors were allowed to carry on! the same policy as last year, their wasting assets would all l» wiped out during the next two years, ami there would lie no need 10 create a special fund. In reply to Mr. Corrigan, the chairman stated that It cost from Ss to !)s Gil in wages tier 100 feet to put the timber on the trucks Mr. Corrigan held that. It cost other companies fis Oil He also considered that with an output, of three millions the cost to the Bo* Company was las The chairman pointed out that this included the cost of manufacturing the boxes and crates. • Mr Corrigan said that there was a good deal in the balance-sheet, hut the chairman had covered it. very nicely. He was an expert at the business, and they must congratulate him on it The companies had paid Into the Box Company £02,000, and what had ihev got out of It ? The directors look the credit of running the business so successfully this year that they tiad been able to wipe off £II,OOO depreciation, but. bo po'oled out that it had cost the Hawera Company £I7OO extra for crates last year, so that the r.ox Company evidently put the extra cost on the boxes and then wrote it off as depreciation. If it was necessary to raise the price of crates this year In order to wlpo oft one-third depreciation In one year there must have been some slackness in the. management, in the past. All that dairy companies could expect for their £02,000 capital in the concern was a few old tram lines and a few worn out sawmills. All had given by way of bonus to get cheap crates, .ind yet, while (lie Box Company charged them 2s 9d, Hawera had arranged With a. private concern to purchase at. 2s 4d. The chairman asked if Mr. Corrigan had any to sell at 2s 4d.

Mr. Corrigan said that the Hawera company had got ten years' supply at 2s 4d, and if the Box Company came down to that price they would get theirs for 2s 2d. In reply to a further question by Mr. Corrigan, the chairman said that no depreciation had been written off tho item Tc Pona Kakahi tramway £4224, as there was a debit with accumulated interest owing by the Tongarlro Timber Company. Mr. Corrigan maintained that tho company had not been run on business lines. A reserve fund should have been created to compensate for their wasting assets. The company also should pay Interest on capital though it, might he argued that this would be taking money from one pocket to put in another. It was not commercially sound not to pay Interest. Mr Williams (Mere Mere), said that ho had beard a vague but rather disquieting rumor that by some means the company had lost some valuable grazing leases. Tho chairman said that the actual position was that the company had the right to select 1000 acres at any timo within ten years on paying a rental of (id per acre. but. this would havo necessitated the expenditure of £6OOO in falling, grassing, fencing, reading, etc, besides the cost of stocking, employing manager, etc., and as the company was formed for tho supply of crates and boxes and not, for farming, he contended It would not htvo been good business to have taken II up. Mr. Corrigan understood that the land was very valuable, equal to that about Kar.onga, hut the chairman said that it was not. iteing pumico In tho flats and swampy and t.nssocky on tho high ground. Moreover, lb, company would not. sell the lease. •

Mr Lenpcr (Lopporion). asked if It were not for the Box Company what price would Ihev have to pay for crates.

The chairman said that though there might be Isolated cases of mills favorably situated selling crates cheaper than Iho Rox Company, tho market price of outside firms was dearer. Mr. Corrigan said that tho company hail been formed to protect, them from exploitation by sawmillors. and now they were ahoro the sawmillor's .prices. He asked whether tho company had not been offered some timber at 12s Cd, but. refused to deal at this price, offering to pi\je 12s 3d, and afterwards bad to pay 21s for the timber. This, he considered, was due to tho neglect of tho late chairman. Mr. Morton considered that It was unfair of Mr. Corrigan to cast reflections on the late chairman, who was absent He pointed out that they could not deal without the anprov.il of, tho Sawmillors' Association. This, Mr. Corrigan denied. He stated that lie wnnld'ask the question if Mr. Murdoch wore present.

Mr. Gibson (Rabotu) was pleased to bear that the company had written off heavy depreciation, a policy Hint he had advocated. He asked whether the directors had considered if some other timber might not bo substituted for white pine. Ho also touched on the fact that about, ten per cent, of tho crates received at the Rnhotu factory were badly cut. The chairman explained that, tho factorv building and plant at Ohutu if pulled down anil re-erccied would he. worth more to-day limn what it stood on the books. When factories complained about badly cut crate ends, etc, they were compensated. The management were doing all it could to keep a check, but a lot of the work was pf necessity done by boys who had just left school Tho directors would bear in mind the question of using sappy red pino or totara for portions of the cheese crates as this would enable the white pino to last longer. Mr Lenper asked whether tho directors had considered reveneerlng.

The chairman said there had been a gnoil deal of experimenting with packages for years past, some of which had heen in the nature of veneer. When In America, tho chairman would look into the matter. If they cmilil effect a saving by using on-third of the timber it would mal-9 the white pino supply last conslderably longer. So far. none of the experimental packages hfid been hrousdit into practical use, but ho believed the dnv was coming when a practical solution would be found.

Mr. Jacob Marx (Mangatoki), said Ibat tho greatest fault their factory found with the crates was that at times thoy did not get them, and at other times they were green. He did not agree with those who said that Interest should not bo paid. They should pay interest on capital even If It. were necessary to increase the price of crates and butter boxes a half.penny. He considered that the grazimr rights had been treated too lightly by the directors, as It appeared to him they would "have been a valuable asset. Ho pointed out that four years ago bo had endeavored to have the wasting assets depreciated, and have a reservo fund established, but circumstances were changed owing to tho war. The directors hail done the best they could, but he blamed them for not raising the price of crates at least two or three years earlier, as companies were getting them for less than they should have Nothing wasted quicker than timber rights, and they must endeavour to keep their finances right. Ho explained also that his company had arranged with an outside concern to obtain 180,000 feet of white pine timber which would bo sent to the Box Company for manufacture. Tho Idea was to eke out the life of the white pino supply. The crates would he 2d cheaper if tho scheme worked out right hut it was worth this as his comnany had to stand the risk of loss by financing tho concern. The chairman expressed his gratification at this explanation, pointing out that It was good business for companies to secure white pine wherever possible. The chairman pointed out that to nay interest on tholr £02,000 paid up capital would involve an expenditure of £3745, at 8 per cent, besides £624 income tax. This would ' mean an increase of 2%d per box and crate. Mr. Marx said that by getting boxes cheaper In the past they had enabled some factoti.-s to pay out a little more for butter-fat ami many people had sold out, leaving a fine bab) 1 for those that were left. Mr. Honeyfleld (Patua). thought tho dairy companies had already received good value from the Box Company. What thoy wanted wa» not Interest, but assured supplies. In reply to Mr. Gibson, the chairman stated that at present no one got a bigger discount. In connection with building timber than did dairy factories. A builder got the same discount aa a dairy company. They had order, on their books now for 23 houses, but owing to the railway curtailment could not get the timber.

The report and balance-sheet was then adopted.

ELECTION OF DIRECTORS. Messr3. W. D Powdrell and .T. S. Conned wei-e re-elected directors unopposed. Mr. Parrott was re-elected auditor . at the same remuneration. INCREASE OF CAPITA!. Mr. Corrigan (Hawera.) moved. In accordance with notice, that the capital bo increaseii from £IOO,OOO to £250,000. Tho chairman pointed out that this did not express the opinion of the directors. Until such time as they would say definitely that the negotiations- Willi the Tongarlro Company wouhl succeed they would not say definitely what capital would be required. Mr. Corrigan said that lie was sorry to hear Hie chairman make this statement, as In the face of the resolution carried at a special mooting, be thought they wore facilitating the scheme by preparing for the necessary capital. He did not favor the "go-slow" policy. The chairman suggested that the motion should be withdrawn. *No doubt it was moved Willi the Idea of assisting the directors from whom it should come. The directors, liowcer, were not prepared to make proposals at present, but they were, by no means apathetic in the matter, as thev were leaving no stone unturned He outlined Hie negotiations Hint had so far been made by them with the Tongariro Timber Company, and stated it, might possibly lie that legislation would have to go through Parliament this session. As soon ns matters were arranged, the directors would hring down their proposals for Increased capital. After further discussion, Mr. Corrigan withdrew the resolution. INTEREST ON CAPITAL. Mr Corrigan then moved that tho Articles of Association he altered to provide for compulsory payment of interest on paid up share capital at not less than D per cent, per

annum. Mr rv,rs-'irnu hold (list if. was not busimssliko I" vim iiny crinoern without pay'in rciily I" Mr Mnr.f, who favored the roni'nn, the chairman staled llinl iniirosr could only be paid out. of proflls, and if the proposed article wove in vng-un and '.here was mi oroflt lliii! veur, llio Interest 'wouict be cumulative. Mr. Powdroll r.ivi.i-oM payment tif interost. thouv.ii lie pointed out. that to do so would mo:m increasing tlisj pi-ice of tho orates. Mr. Power tliouclit the directors should first stabilise the existing captul iiy the institution or » depreciation reserve fund. Mr. J. Wotildrklgo considered the heller Idea was to have a rehate on the louses. Tli' chairman said the interest would involve the company in the payment of £3120 per annum, and In addition, £520 Income-tax would have to he paid On the. voices, the resolution was declared lost, Sir. Corrigan culled for a ImHot. which resulted oil for, 83 against. 'i'iie motion was therefore lost. INCREASING THE DIRECTORATE. Mr. I. R. Corrigan, on hehalf of the Hawera Dairy Company, moved In the direction of inereasin;; the directorate from seven to nine. Ho considered that a concern lllcoly to grow as this w..s, required all tho-bost brains of Iho dairying industry. This was seconded by Mr. Williams and carried.