EGMONT BOX CO.

Taranaki Daily News, 1 September 1920, Page 8

EGMONT BOX CO.

i FOURTEENTH ANNUAL MEETING, t t t MUCH IMPROVED OUTLOOK. t ( t The fourteenth annual meeting of the Eg- 1 mont Box Company was held at Elthaim yes- i terday. Mr. 3'. B. Murdoch, chairman of ( directors, presided, and the following 1 factories were represented: Alton, Ararata, 1 Awaiuna, Betl Block, Cardiff, IJltliam, i Hawera, Joll, Kaimata, Kaponga, Kaupokonui, i Lepporton, Lowgarth, Moketawa, Mangatoki, t Mangorei, M'anutahi, Mills, Melrose, Mere- > mere, Mldhirst, Moa, Ngaere, Normanby, North i TaranaMt, Okato, Punlho, Patua, Rahotu, Klverdale, Strtfford, Tarata, Tarlkl, Tirl- J moans, WaltaraTtoad, Warea, Urutl, and Tlko. rang!. REPORT AND BALANCE-SHEET. The report stated that the result of the ; year's operations was very satisfactory, and had enabled the variouß wasting assets to be substantially written down, thus ' materially improving the company's position. After allowing the sum of £11,834 17s 7d : for depreciation and exhausted bush, and £3OO to create a reserve for bad deb's; there ' remained a balance of £1297 Is '/d, which i the directors recommended should be carried forward. CHAIRMAN'S ADDRESS. The chairman congratulated shareholders on the successful season that had been passed through. There was no doubt that the demand for both white pine and hardwood timbers was continually on tho increase. It was satisfactory that the company had been able to obtain sufficient material to meet the total requirements of the shareholders of the "company in. the way of boxn and crates. Last year it required 4,300,000 ft. of white pine to meet their requirements, and with increased production, he estimated that 4,500,000 ft would he required this season. The question of obtaining the necessary timber had always exercised the minds of the directors - very much. Their oid areas were gradually being depleted, and !n this connection, he pointed out that their Ohutu mill would be cut out before the end of the season, and he estimated that they would only get a further I,soo,oo'irt from that area. It was, therefore, necessary to. go elsewhere to look for supplies of timber. The pisition\had been met by acquiring of bush in other parts of the Island. They had secured a block at .Tahua, near the Minn Trunk line, and had been able practically to complete negotiations with the Tongariro Company for that fine area of bush that had been referred to at the last meeting, and he hoped that they would be working it during the coining season. The company would be faced with the trouble of changing over from Ohutu ,to either Tongariro or Tahua. It was Impossible to transfer the whole plant from the one place to the other, because the boiler and engines and some of the machinery would be required at Ohutu for two or three months working up the timber after the mill was cut out. Unfortunately, therefore, this valuable asset could not be transferred to the new site, but it would be necessary to put up a complete new mill. In order to keep pace with heir requirements every month's cutting had to be a good one, for even one month's loss owing to bad weather put them back conslderibly They were finding more difficulty in obtaining supplies of white pine frowi outside. At present they had entered into a contract with another company, but supplies were very slow -in coming forward, due to the fact that the company could not get at the whittf pine as readily as it could in the past, and the Egmont Box Company was getting In the same position. Their bush was not all whits p'.ne, except in the Tongariro block, which was practically all 'ftiite pine. The Taytta bush averaged about 45 per cent, of white pine, and the balance hard wood, while In their other bushes the proportion of white pine was about 25 per cent. Their mills, therefore, Tequired to have greater capacity than In the past, as In order to cut the requirod quantity of white pine they had to cut more hard wood' as well. There was, ho pointed out, a growing demand for hard woocT for whereas the previous year they had sold 900,000 ft of hard wood, they had, during last season, sold over 2,000,000 ft, and if they had had it could have sold another 2,000,090 without completaly providing for shareholders' requirements, .BUSINESS IN HARD WOOD. They had, ho said, come to be saw-millers In the true sense of the word, more than in the past, when the main object for which the company was found was to cut white pine sufficient for the requirements of the industry. They now had to tako advantage Of the hard wood. There was no doubt that the hard wood side of the business pa/d at ttie price at which it was sold. That price was not fixed by them, but was sanctioned by tho Hoard nf Trade, no doubt nn the advice of the inil.ers. That price | paid the Box Company well, on account of f the fact that the main part of their busi- , was the procuring of the white pine tin"" tequired. It would not pay so well ■ if thwo wsb only hard wood In the block, hut thera was no doubt that It would pay The outside demand for timber was so great 1 that they would have no difficulty in selling • 5.000,000 or (1,000,000 or even 10,000,000 ft if thev were to (jut that much. He touched on' the negotiations with iW Tongariro Company, remarking that this had ■ been a difficult piece of business, and that a few months ago it looked as if they were , up against a deadlock. However, all difficulties had now been got over, and thai partlcular piece of , bush would bo ready fop work straight away. The agreement, he said, provided fof the Box Company paying a straight out ro> *!ty of 3s per 100 ft of ; timber, and it wn* hoped to have a mill esfrhlished there this season, The company also- had to assjst the Tongariro Company in birthling a railway. He pointed out that they had been negotiating with tho Hallway D.'JMrrmenf. to give them a siding to the Main Trunk Line without the necessity of having to build a lutgn viaduct, and ijie Deportment had now agreed to give them a siding on tho south side of Kaliaki, which wmild obviate (he building of the vladuttt at a cost of from £SOOO to £OOOO, thus pultim; them in a much better position. They hail acquired a small orea of bush near Obnlmnc, mostly hard wood, but containing 200..000 or 300,000 ft. of white oi«6. They had put a small mill in there, and thjs was now working, Ami timber would be coming forward from that area otraialit away.

The position regarding tils working of the company was a very satisfactory ope. The price that the Box Company had been charging for boxes and crates, though an Increase as c.-ioipared with the previous year, was considerably less than that charged by proprietary concerns to companies outside. Indeed, had the shareholders of the Box Company had to give that price, it would have cost them £5600 more for their boiea and crates. COMPANY SERA'ED ITS PURPOSE. When they looked at the position from that point of view, apart from the fact that their supplies bad been assured it would show that the Box Company had served the purpose for which it was established. Their shocks at present were very satisfactory indeed, being practically the. same as at this time last year, and he hoped that during the coming year they would be sufficient to meet the position, and cause no delay in supplying shareholders. The only difficulty was in procuring wide timber for cheese or;- ;es. They had procured a jointer, and ! mre supplying jointed centre pieces. As ■ct they had not made jointed ends, and they did not want to if it could bo avoided, as he I was doubtful whether these (crates would tand -handling. It. looked, however, as if | there would be considerable difficulty in obtaining sufficient supplies of timber I!i% inches wide —they were now cutting trees a« i;mall as fifteen inches—hut if they had to start manufacturing jointed ends, it would only be done after careful experiments had been made as to how the cheese erates would stand tho necessary handling As factories had been notified, the prlen of boxes had been advanced to 2s Id, and that of crates, to 3s. This was rendered necessary by the increased costs, which had been tremendous. In the wages sheet alone there was nn increase of £GOOO. the greater part being due to increased wages. Thev had, however, to face that Hardlv three or four months went by without having to meet Increased demands. How long It would last, ho could not say, but it looked as if they would get soon to the end of the tether. A lot of employees looked upon the vaiue of their work to be in comparison with the value of the goods to be carried inside the boxes, but he could not aceept that viewpoint, as what would he the position In fbe case' of gold. The Box Company had got on exceedingly well with its employees, having had no trouble right' through the •eason They had all proved very good men. During the year they bad manufactured JD.OIW boxes, as compared with 107,000 boxes the previous year, and 339,000 cheese crates, as compared with 320,000 Their sales of hrrd wood had been 2,194,000 ft, as compared with S(!7,ol)tifi. The turnover, there'nrc, showed the large increase of £13,!i00. They had still a number of people outside the present shareholders who were anxious to become members, and when they found companies in Ohakune and in the Walrarapa anxious to join the Box Company It showed that things «nu«' V bad indeed outside the company for .th< supply of boxes and crates. Referring "to the increase In capital, he Uid that £i«,OOQ of i*l* had beta culled

up, and he intimated that in the case of additional share capital requited by shore holding companies, due to increased output, allotments would bo on the basis In existence prior to the increase in the share capital. HO said that the cost of production during the past season had been about the same as the preceding one, but for this year he anticipated a considerable increase, on account of the expense the company would be put to. At Ohutu, they had a plant with a capacity of 400,000 ft. per month, whereas this year it would only cut 1,500,000 ft or timber, drawn from various little pockets. M>r this season It would require nearly a3 many men as last year, when the mill cut! out over 3,000,000 ft. so that the cost would be very heavy. After this year, however, they would bo established in. other centres, when he anticipated that the cost, would be considerably reduced. Taken right through, the position was very satisfactory indeed, and he hoped by this time next year to have the company in full swing. He then formally moved the adoption of the report and balance-sheet. Mr. I. A. Bridge (Kaupokonul) seconded. THE DISCUSSION. Mr. Forsyth (Eltham) asked whether the price received for hard wood was sufficient, after allowing for depreciation, wear and tear, etc., to make it a payable proposition, exclusive of the white pine. The chairman said that it was a payable proposition. Even allowing for purchasing a considerable quantity last year, it paid well. The company was not charging as much for its hard wood as outside concerns. Mr. Marx said that a very important matter had been mentioned regarding the securing of certain rights over the Tongariro bush, and he considered some mention should have be,en.made In the balance-sheet. The chairman said that at'the time the balance-sheet was Issued the negotiations had not been completed," and they did not become a liability until they were completed. Regarding Taurewa, he said the company held this on a long tenure, having 40 years to run, and there was a probability that they might come to some arrangement with the Government to dispose of the lands containing a little lime that were suitable for agricultural purposes. Mr. Marx said that he felt it would he a jood thing for the company' to pay interest to its shareholders. This would put the company on a commercial basis. Although this would necessitate the payment of a tax the directors would be well advised to consider the matter. Dairy companies were Interested in many companies, and the Box Company was the only one that did not pay interest. Mr. Arthur Morton said that as one who had been personally responsible for running the company during six months of the year, he could congratulate shareholders on the balance-sheet that had been submitted. This showed a very much improved position. During the past fOur years the position of the company had improved, until it was now In a nrst-class position. This was due to the policy adopted of writing off largo amounts for depreciation. That policy had been continued this year, when £10,802 had keen written off for depreciation, and £1972 for exhausted bush. They had sold a lease for £IOOO, and their leases now stand in the books at £259. This was represented by the land on which the Ohutu imlll now stood—a very valuable site. Their freehold properties had increased by £1154, and their dwellings by £I4BO, duo to the fact that they had purchased dwellings for some of their employees. They had felt for somo years that It would be necessary to provide accommodation, more particularly for married men, and In Eltham they had purchased it large area of land and put up a number of houses, and he considered that as years went on this policy would have to be followed more and more. It was a sound policy and, moreover, it was a good Investment, as the property, particularly in Eltham, would always be realisable as an asaot. No less than £5048 had been written off iho tramways, which now stood at £15,328. A good deal of the material in this, including the tram rails, would bo available for removal, and he hoped next year to be able to show that this item had been wiped off.

Mr. Morton pointed out that last year they had to go on the market and buy timber to meet their shareholders' requirements as they recognised that it was advisable to build up a connection for tho sale of hard wood timber. The will erected at Oiiakune would start next week cutting hard wood, and they had an assured market for all they cut. Mr, Gibson said" that £675 had been written off tho Ohutu bush last year, as against 3,500,000 ft cut, leaving £G7O to be written off this year, with only 1,500,000i't to finish the bush. He considered that the 1 depreciation in this item had not been sufficient. Mr. Olhson also considered some mention should have been made in the report of the fact that the negotiations for the purchase of the new bush had been completed. In reply to Mr, Rowlands (Mangorei), the chairman .stated that the price asked by the concern Teferred to for boxes was 2s Bd, I and for crates 3s lOd In shooks at the factory siding. The report and balanco-sheet was then adopted. ELECTION OF DIRECTORS. For the three vacancies on the directorate, caused by the retirement of Messrs. J. Wooldrldge, F. ltanford, and .T. R. Cwrigan, there were four nominations, viz., the three retiring directors, and ,1. S. McKay. Messrs. Mortoii and Tonks were appointed scrutineers, and the election resulted: F. Ilanford (109), J. S. McKay (102), J. Wootdridge (i! 6), elected; and J. R. Corrigan (67). Mr. Perrott was elected auditor, the fee being fixed at 50 gns. The directors were voted an extra 10s 6d per meeting for meetings attended during the past year, imaking £1 Is per meeting, and also £1 Is per day when travelling away on the company's business. ARTICLES OF ASSOCIATION. The chairman moved that (ho old Articles of Association be rescinded, and that new articles be substituted. He pointed out that. ' the present articles were obsolete. Mr.' F. Ranford seconded. Mr. Marx objected to the clause giving power to the directors to allot shares to any shareholder. This he considered made it an unlimited liability company, and not a limited liability company. He moved to delete the clauses giving that power. Mr. G. Gibson (Rahotu) in seconding, pro form, ?a!d that the question was bound to come to tho front sooner or later. In a dairy factory the work was all carried on in front of the shareholders' eyes, wherea's hi the Box Company it was not. The position too would become more obscure ns the Box Company became more and more a trading concern as distinct from a purely cooperative concern. Some means would have to be divided to keep the two aspects of the business separate and to divide the responsibility, The chairman said if those clauses were cut out he did not know where they would be.

In reply to Mr. Forsyth, the ehairman said there was no obligation on the company to supply boxes or crates to companies that did not held the reciulrod number of shares. Mr. A, Morton said that tho articles which Mr. Marx askod should be deleted formed paTt of the articles subscribed to while Mr. Mars was chairman of the company, so why were they not good enough now. Mr. Marx said that the operations of the company were becoming bo largo that there was now a danger. Ho did not think the article could be enforced, and sooner or later It would become a test case and It would be a had (Jiiy for cj-oporation when that caisne about. Mr. Connett said It would be a bad day if tlic case was., lost, as he looked upon this as die. underlying principle of cooperation, H would indeed be a bad day when one or two could stand out. and not takd their fair share of responsibility. What would be the position in regard to Tongarlro bush if soma could stand out. Through the foresight of the majority they now had assured su ilies for a great number of years. Mr. Marx held that the Bo\ Company was pot on parallel lines with dairy companies. After a little further discussion, the chairman, in reply, said that he considered the articles were fair, just and reasonable. Before the directors could act on the articles objected to, sanction had to be given by the shareholders. Delating the articles would, he considered, jeopardise the existence of tiie company.V" The amendment wiis then lost, and the resolution was carried. ■ PAYMENT OF INTEREST. Mr. Marx then .moved that it be . a recommendation to the directovs to so order their business as to pay Interest not ex..ceedinij 0 per cent.' share capital. To provide interest and tax, he estimated that itwould have cost only 4d per 100 ft pit the two million feet of hard wood, a good deal of which was purchased fcv non-shtaholdtas. Up to three years ago the company paid Interest. Mr. J. R. Corrlgau (Hawera), in seconding, Sitid that they were getting into the position of a. trading company, and Ihln would be more marked every year. They sold Umber to non-shareholders at the sane price as shareholders, and gave the same rebate io each. Shareholders, who supplied tho money wero entitled to aome consideration Mr. Morton pointed out that 4d per 100 ft in 2,(100,000 would only provide £334. To pay 6 per cent. Interest on £75,00(1 would renuire £4388. This would entail payment of Income tax equalling £2250, .as Immediately a profit of £6OOO waß made they would have to pay 7s 6d in the £■ Income tax. When the incidence of taxatjion was altered, they might look at the matter from s very different aspect. i . Mr, Gibson (It&hotu), la support'ng, said

thit the fact that the company had got out of a purely dairying business to a commercial concern added weight to tho resolution Ho favored conserving Interest years ago, when the company was iu a had financial condition, but now Mint it was bettor they should nay It, It was not right that dairy cojni»»iqs should find capital free of interest to supply outsiders with timber. Regarding payment of income tax, he thought if they were liable for it, they should pav It. . Mr. Connett (Bell Block) said that the company was forced to enter the hard wood business ns the greater proportion of their timbe> wns hard wood and they had to dispose of this to enable them to sell their hoxes and crates at a. reasonable cost. Mr. Corrigan said that he would be quite safe in saying that they would be milling two-thirds of hard wood and one-third of white pine P was not right that dairy companies should supply all the capital without paying Interest The extra cost could be Put on the hard wood. Mr. ,T. Brown (Maketawa) considered they were on the wrong track. They had to purchase mixed bush. If They went through the bush and only tool; ail white pine, they would have to charge fa instead of 2s id It was. therefore, right that they should make the best of the hush and cut the hard wood, mailing use of the outside market to dispose of their surplus. | Mr. Green (Rahotti) considered that if the concern would no' pay interest on capital *v should he closed down. Mr. Ranted said that it did not matter it their money was being partly used to develop I the hard wood providing tho profit oe that reduced the cost of their hoses and crates. He considered it far better to glvo rebates rather than .pay interest, which would r.ece.ssitat* lh» psymen* of i&oome tax. The resolution was declared lost on a show of hands. GENERAL. Mr. .T R. Corrigan was accorded a hearty vote ol thanks for lu'j services on the directorate. A hearty vote ai thanks was accorded the chairman and directors.