DAIRY COMPANIES.

Taranaki Daily News, 25 August 1920, Page 8

DAIRY COMPANIES.

KAPONGA. The twenty-second annual meeting of the Kaponga Dairy Company was held In the Public Hall, Kaponga, yesterday morning, when Mr. A, V. Tnte, chairman of directors, presided over an attendance of about fifty shareholders. ANNUAL REPORT. The annual report congratulated shareholders on the most successful year which the company had enjoyed In Its history. The report continued:: Payments totalling Is 9d per lb. butter-fat were made during the season, and there is remaining certain surplus of £10,893 16s id yet to be distributed. It is recommended that a dividend at the rate of 5 per cent, per annum will be paid to all shareholders on the amount of share capital subscribed at June 30, 11)19. This will absorb the sum of £493 12s, and the then remaining buiance will allow .of a further certain payment to supplies of 3d per lb. butterfat. The directors have deemed It not advlsable to i.i.ike any estimate of the amount receivable by way of storage rebate from the Impefial Government, nor of the sum due from the butter equalisation fund. The anticipated amount receivable under these two heads should provide a sum equal to a further payment of %d, making the total disbursement for the year 2s oy 2 d per lb. butter-fal, but the directors considered that this should be substantiated before incorporation In the accounts. Attention Is directed to the statistics, which in regard to test, yield, etc., are the most satisfatcory in the records pf the company. Quality has also been equally good, of the fifty-eight factories shipping through Moturoa, Kaponga again heading the list with an average grade of 92.5. For the Information of non-supplying shareholders, intimation is made that the company is prepared to purchase n limited number of shares r.t the rate of lfls per share. Statistics—Lbs. milk, butter-'naking 642,435, cliees«-making 20,707,923, total received 21,410.338; lbs butter-fat for butter-raalring 25,010, cheese-mnklr.g 808,532. total received 833,542; lbs. milk to 1 lb. butter 21.57; to 1 lb factory cheese 9.01; to 1 lb. commercial cheese 9.86; lbs. factory cheese to 1 lb. butter-fat 2.67; lbs. commercial cheese to 1 lb. butter-fat, 2.61; average test, 3.9; overrun, 16 per cent ; commercial cheese mad*, 940 tons 4 ewt. 4 lbs ; creamery butler made, 13 tons 5 cwt. 94 lbs.; whey butter made, 19 tons 18 cwt. 56 lbs; total output, 973 tons S cwt. 42 lbs; expenses per lb. butter-fat, without depreciation, 4 37d; with depreciation, 4.60 d; expenses per lb. commercial cheese, without depreciation, 1.73 d; with depreciation, 1.82 d.

The balance-sheet showed that the total receipts had been £100,390 Is lOd. The principal Items of expenditure were: Wages and allowance £4311, requisites £2407, fuel £2029, export charges £3765, administration charge £1278, generd charges £IB2O, depreciation £4"O, transfer to redemption £SOO. The sum of £72,824 had been advanced to .nilk suppliers, and there was a balance of £10,823 16s 2d. CHAIRMAN'S ADDRESS.

The chairman said that the work of reconstruction of buildings and plants that had been In progress for several years had been completed. The sum of £7R9 had- been expended on the Rowan branch. Owing to the cessation of the war and the Improvement in shipping conditions it was decided that it would net pay to store at Kaponga, and accordingly the butter plant had been shifted 'rom the old building into one of the new rooms, and they now had a thoroughly up-to-date and complete butter plant, in addition to an equally efficient cheese plant. The possessing of such a dual plant was an advantage owned by very few, as they were able to manufacture oither butter or cheese, whichever was the better proposition. It was found possible to let sufficient water through the pipe to enable one of the turbines to be used, and sufficient power was generated to drive the butter plant Towards the end of the at son the pipe line broke up so badly tht:t the water had to be shut off altogether. Since then the services of an expert civil engineer (Mr. Sturrock, of Hawera) lia'd been obtained, a. certain amount of work had been done, and a very satisfactory job would yet be made. Some shareholders would recall that prior to the Kaponga Town Board installing Its own electric power works they approached the company with a view to obtaining a supply of power, but the proposition was not favorably considered, and the Board had gone ahead on Ks own account, with very satisfactory results. The Board had again approached the company, and though nothing definite had yet been arranged, (here war, every reason to believe that an arrangement would be arrived at satisfactory to both parties—one that would give many of the company's suppliers an opportunity of obtaining a supply of electric light and power. Meanwhile there would be some delay before their own plant was running, and the company was installing a 5-h.p. and 15-h.p, motor at the Kaponga factory, and would obtain the necessary power from the Town Board. |

New shares to the number of 1C75 had been issued, and the paid-up capital had Increased by £IS0". Innovations and additions to the buildings and plant nt the various branches during the past few years had necessitated it very heavy outlay, and the overdraft had been mounting up accordingly. It was necessary that this should be .rectified as soon as possible, as trespassing on the overdraft materially affected the ability to make payment to suppliers promptly to the company's serious detriment when contrasted with their neighbours Early In the season therefore the deductions for shares was increased from v 4 d to W, n policy that most other companies were adopting. They should also face without delay the reduction of the share basis as essential to placing them on a thoroughly sound and business like financial position. On account of the reduced share basis and the largely increased consequent holding of shares the present basis of. computing votes had become antiquated. At present the maximum was five votes for i"> shares, and every one now, whether he had a large holding or not, had the maximum number of votes so that it was identical with ono man one vote, and the directors considered some more equitable system should be introduced. Owing to the advent of motor traction the farm was not required, and It was sold to the lessee, Mr. A. E, King, for £OO per acre. It had been decided in the future to write off not less than 2 per cent, on concrete buildings, 4 per cent on wooden buildings, and <! per cent, on plant, as a. safe minimum, and when comparing the depreciation written off by various companies,, consideration must be given to the condition of the buildings and plant, and in this connection the valuers had -informed them that the three factories of their company compared more than favorably with any other company. Better factories meant more expensirs factories, which meant n bigger outlay and bigger annual Interest charge, but It was expected that this would more than be compensated for by (he saving In depreciation, or otherwise what would be the. advantage of going In for substantial buildings. A redemption account had been esiabilshed to cover any loss that might be. sustained by reason of depreciation on the value of shares held In any other companies. The £2750 Invested. In the Box Company would in all probability have to bo .ultimately written ofT, as it was represented in that company's books by a wasting asset, bush cutting rights, etc., which asset disappears as the bush is cut. Tlio amount instructed tit last meeting to be transferred freim profit and loss to redemption account had been placed to the credit of this account, together with the profit on the sale of farm and profit on shares purchased, and it was intended to further augment this account from time to time by crediting to It I he profit on all shares purchased by the company. They had been required to take up an 'additional 3109 shares In the Box Company, on which a call of is has been paid. The Bacon Company nad now called up the full amount of their shares with the exception of 3d per share. . Tliey were able to make milk advances to suppliers much more promptly than the previous season, Is 9a being paid up to July 39, Sd better than at the same'time In 1919, involving an increased distribution of £IO,OOO up to that date Demands for loans to suppliers had been very heavy and the question of providing for these advances other than front the working fund of the company was a matter that would have tp lie faced at an early date. Much attention has been given by the directors to the proposal for the farmers to establish their own selling agency In London, in association with the C.W.S., and after due consideration it was decided for varum* purposes, not to participate in the propm-.a! tills year at any r.itc. and the output has | been again disposed of through the company's former agents, Messrs. .1. and J. Lonsdale and Co. I !t had been suggested that as the sugar of milk expenses was a charge incurred in tho interests of shareholders generally, and not of any year's suppliers in particular, tba1* should be met by the shareholders and net the suppliers. A deduction of >*-per cent, from the shareholders' dividend would squire it up in the course of three years, the period suggested by the auditor, j Htoeks on hand had been bought at eon-1 sidersbly below current prices and placed them in a. very favoroble position in this respect. Thus bandages of which they still held a year's supply, 20,001) yards bought at IVfcd cannot oe purchased to-day under Is 6d. You can figure tor yourselves the saving on this one item alone. Rennet, veils, staples, elc, have been equally well bought. Kilts! ehowed an increase due in the case of firewofjd $o higher prices and its inferior quality requiting <he use of a much greater ouuitltr to .eat tinmiwt result*. »nj (lis coal I

shortages also requiring a great use of coal for fuel. Coai also snows an increase, but actually considerably less was used, the Increase being accounted for by the advance in price from 21s to 26s per ton, and the charging or the railage and cartage on it under the same heading, this being is much per ton as the price of the coal t\ the mines. As already Indicated they «crf seeking a way out along the lines ot electrifying the factories when only sterna for heating purposes will be required, wh'ich will cut the fuel bill la half. THE DISCUSSION.

Mr. Mellow questioned whether the company had power to sell electric power. Hawera company had rights over the district. A shareholder asked whether it was the Intention to transmit the electric power to the branches.

Ths chairman said that was a matter that lay with the Town Board. The dairy company only proposed to generate the power and after making provision to supply their branches, proposed to sell the surplus to the Kaponga Town Hoard, A turbine had practically been purchased, but they wanted to be certain that they were putting In the right turbine. Providing the Town Board got support along the road it was practically certain something would come of the scheme. The fuel question was a. very serious one. It was mounting up now, and in a few years would amount to £4OOO. An electric scheme would reduce their fuel bill by half. The chairman said that, the company would be put to a little expense over the matter. A rough estimate of the cost of the race was about £BO to £9O per chain for the 30 chains required. Mr. Gibson favored tho use of steel pipes. The chairman said the directors had gone Into the question, and 15 chains would cost about £SOOO as against £I2OO in concrete, and the latter properly supervised would be" everlasting. ... Mr. Day considered the item of £4BO for allowances for employees was very heavy. The chairman stated that this Included, rent of cottages which the employees occupied calculated on 10 per cent, of the cap Hal cost, viz., 6 per cent, interest and 4 per cent, depreciation. In reply to Mr. Mellow, the secretary stated that while the Hawera Electric Company had a right to supply electricity over, their territory they had not tho sole right, and moreover, were no likciy to use It. He understood that It was tho Intention of the Town Board to make a canvass of the proposed route of the electric lines and when they had "ascertained the amount of power likely to be required, would be in a position to go ahead. Mr. J. H. Bentley said thai tho dairy company had no legal right to go on the roads to sell their electric power, but there was nothing to prevent them selling the power to the Kaponga Town Board, which, as a locol body, had the power to erect lines and transmit and sell power. The chairman then formally moved the adoption of tho balance-sheet.

Mr. Geo. Hill contended that the Hem of £4lO for depreciation was very low, and showed that tho plant and buildings must have been kept In good repair by ihe old directors. The chairman admitted lh.it the depreciaflon was'on the low side, but their buildings and machinery had been kept in good order. There was also £SOO transferred to redemption account.

Mr. O'Neill did hot sec the necessity of writing off heavy depreciation, when most of their buildings were in concrete. The chairman pointed out that they had also placed an additional £IOOO to reserve. Jlr. Dagg agreed that the balance-sheet was Ihe most successful In tho hisjory of the company, and he thought that the directors weio to be congratulated by shareholders He moved In this direction. „

Mr. Hill, In seconding, considered that shareholders should later show their appreciation by Increasing the directors' honorarium.

After further discussion on some minor details, the adoption of the report was seconded by Mr. YV. A. O'Neill and carried On the motion of Messrs. Dagg and Hill a hearty vote of thanks was accorded the directors, secretary and staff for the work done during the past year.

Mr. Bentley referred to the splendid record achieved by the Kaponga factory in heading the average grade list of factories grading at Moturoa, this was far better than winning a prize or two at shows. On his motion, the manager and stall were accorded a hearty vote of appreciation.

ELECTION OP DIRECTORS. For the three vacancies on the directorate caused by the retirement by rotation of Messrs. W. A. O'Neill and .1. VV. Bradford, and by the resignation of Mr. D. P. P. Malcne, therfl were rhree nominations, Messrs. J \v. H. Gardner, G. H. Hill and W. A. O'Neill. These were declared elected, but a ballot was taken to decide which should fill the place of Mr. Malone who would lit the ordinary course, bare retired next year. Tills resulted as follow: .1. Gardner 111.'!, \V. A. O'Neill 179, and 0. H. Hill 108. The first two were declared elected for three years, and the latter for one ye«r. Mr. Bradford did not seek re-election. Mr. I.ennon was re-ele»ted auditor at a fee of 25 gns. FINANCING SUPPLIERS. Mr. Dagg moved that in vieV of the finances of the company being embarrassed owing to the loan to suppliers, it be a recommendation to the directors to devise some means of providing for these advances other than from the working fund of the company. Bs pointed out that tho loan account now stood at close on ££ooo, and this by keeping up the. overdraft, prevented the pay-out of the bonus as early as would otherwise be possible. Be thought that the establishment of a private loan company, which ho understood had been done by AwJatumi, Jdlls, Kaupokonui and M'angalolii, would meet the position. Mr. Gibson pointed out that the further payment was not a bonus but a supplementary payment. Mr. Webby seconded. The chairman said tlrtt he had favored the formation of a private loan company. Tliero was no doubt that the loans to suppliers embarrassed the company, though it was good business, as besides helping many a man they also showed a profit. Mr. O'Neill was in syonpathv with the proposal, but he> did not think 'lt a fair thing that the loan company should be formed entirely by- the directors. Mr. Mellow favored going on as at present. If a, company was formed it should be outsido the directors entirely. Mr. Hill thought that tho company required more reserve fund. Mr. Dagg said that it was not fair to young suppliers that their payments should he held up on account of the finances being embarrassed through tho loan account. An amendment by Mr. Mellow was not seconded, and the* resolution on being put was (teetered carried on a show of hands, by two votes. GENERAL. .

. It was resolved to pay 4 per cent. Interest on share capital, and to set aside 1 per cent, towards the payment of legal expenses, etc. Mr, Dagg gave notice of motion for the next annual meeting that in futuro elections the ward system bo adopted, so as to provide for each branch getting representation. The chairman referred to the necessity of altering the voting basis, which ranged from one vote to five votes. Every shareholder now held shares, entitling him to five votes, so thot It was practically a case of one man one vote. The matter was left In the hands of the directors, the chairman Intimating thai they had a scheme in view to eliminate dry shareholders. The directors' and chairman's honorarium was flxed nt the same fee as hist year, an amendment in favor of u small increase being defeated.