KAUPOKONUI DAIRY CO.

Taranaki Daily News, 7 September 1920, Page 8

KAUPOKONUI DAIRY CO.

TWENTY-THIRD ANNUAL MEETING. A PROGRESSIVE CONCERN. ' The twenty-third annual meeting of fho ICi.iipokonul Dairy Co. was held at Kaiipoltor.ui yesterday. Mr. W. D. Fowure-.i, Ml', (chairman of directors) presided over an attendance of about 150 shareholder. ANNUAL REPORT. The annual roport congratulated the shareholders on a very successful season',! optrfttions. Reserve fund acjiunt had increased by £2951) 13s 2d, and the redemption account had increased by £6842 16? Gd, so that the two accounts together now totalled £31,258 128 Id. The milk supply showed a solid increase of over four million pounds, and the make of cheese had increased by over 200 tons. Creamery butter had increased in sympathy with the increase of cheese, H'ui also on account of the factories being turned on to butter making during the winter mouths. Whey butter showed a large increase over last year, bijt last year was bad, being influenza year. The sales of the company's general store had increased from £73,339 Is 2d last year to £ 92,111 Is lOd this year, an increase of £18,772 0s Bd. During the year your directors availed themselves of the opportunity to purchase the property and business of Mr. John Gilmour, in Manaia, tu that now with the Central store at K&upokonui, and branch stores at Auroa, Kapuni, and Manaia, the shareholders of the company were fairly well served for convenience. That the company's efforts in this direction were appreciated is abundantly proved by the steady increase in tho volume of sales: 1917-18, £61,378 4s lid; 1918-19y £73,339 Is 2d; 1919-20, £92,111 Is lOd. It wasrinterestIng to note that about 60 per cent, of the company's store customers are shareholders of the company. The sum of £2109 2s 4d had been rebated to shareholders in "T" shares in proportion to their purchases, and after providing for depreciation, £251 12s on store buildings, there is a balance of £1775 19s lid to he carried to reserve. On the night of January 28, 1920, the Katua factory was' totally destroyed by fire, and strangely etiouah on the same nighf. about 70 cords of firewood at our Auroa factory were also burnt. Owing to the shortage of cement the rebuilding of lfatua had been seriously deloyed, but it was hoped to have it rondy to take in milk this month. Provision had been made in the working account for redemption account of £1591 4s 6d, and depreciation on motor lorries of £686 lGs Bd. Interest at 6 per cent, on paid-up' shares of £IBOO, and a further payment of £41,0134 14s on butter-, fat supplied during the season, leaving a balance of £1523 14s (id to be carried to reserve after making provision for directors' fees and other necessary grants or allocations. . The payment for the season was therefore 24d per lb. of butter-fat in addition to payment of interest and rebate on ctore purchases" and setting aside £SOOO of storage earned to redemption account. Statistics wero submitted as follows, last : i:s figures being given in parenthesis for Mill.. 03,605, 934 (59,652,113); Wricr-fnt, 2,400,282 (2.317,010) ; cheese 12S.'.S 2-5 tons), 6,405.157 (5,953,557.); butter, creamery, 74,711 (41,192!; whey butter, 113.792 (78,456) ; cheese to lib. of fat, 2.603 (3,57); milk to lib. of cheese, 9.94 (10 01); average test, 3 BG4 (3SB),

The balance-sheet showed- that receipts had Stalled £302,047 12s "(1 (cheese £286,941 17s sd, butter £13,518 IDs lid, interest £1094 17s). Tho principal items of expenditure were: Requisites £14,358, coal and firewood £5280, freight and freezing £4978 salaries and wages £13,027, boxes end . crates £5487, carta;* £2782, veils £997, repairs and ronewals £2247, insurances, rates, etc. £2038, cow tcstinit £297, interest oil shares £IBOO, depreciation £2258; payment to nuppliers was £245,942. CHAIRMAN'S ADDBESS. 11l moving- the adoption of the annual report and balance-sheet, the chairman said that he thought the bulance-sheet was a very satisfactory one, and he had no doubt that shareholders, after going through the balancesheet, would agree with him. He pointed out that tljo reserve and redemption funds had been increased during the year by £2950 and' £6342 respectively, making a total of £61,258 12s id set aside under these two accounts since the inception of the company. The capital account, he pointed out, stood oi £34,210, whilst they had liuildlngs, property and plant which cost them £96,000, ;nd one w:u!d naturally ask how this could he built up out of such a small capital, showing clerrly that the £61,258 had been taker, our of filcfits. and'so had built up the fot! I !'!'] Hicompany. The reserve fund, he pointed out, was built up put of profit made on shares purchased njid re-issued to suppliers. These shares last yfijfcT numbered 2400, and showed a profit of £01?, in addition to /which there wan the saving of the Interest, which ceased from tho time the shares were purchased until they were ftlUy paid-up by the person to whom they were issued There wa*( also £513 interest on the West Coast Refrigerating Company's shares, which had mainly been built up of profits, mid also £1772 from sharo profits. The red;:iiptlon account consisted the depreciation wrltien off the properties, building and plane. the land on which the factory stands limine been written tlown to nothing. The sloraw ronm, which had cost £130,000 lo erect and equip, had earned between £16,000 and £17,000, and this after deducting Ilia cost of running had been placed to the redemption fund Thus It was estlpiated that the building had now? cost the cSspjiany nothing. The num of £SOOO was the net ii>pount that llie building lind made during thf> year. It would have beon qulto legitimate' to have charged this to the share capital account, and have paid out the earnings to supplier#, but Instead they now had the buildings au4 plant free of debt, and had alsc built up the comppny. Dep-ecla-tion oil plant and buildings to ftiP extent of £I7OO had also beer, added to the redemption account, and lie poipted out that this was not deflated because It was thought that the buildiiiSk etc , had actifj|!y dopreciaied, but he could safely say ilpit they had actually appelated, and lhat buildings, pic., which ha 4 cost Ilicm £06,000 eopld not iiß put up to-dity for £150,000, In the store ficeoiijit, sales slmwod n considerable increase ot about £IB,OOO. part of this increase wai due to the r'a:t thai they had purchased (Jilmour's; store at Manaia, and had run At for the last Ave months. It had been said in t)je past that (he store at Kaupokonul only benefited tl,i> settlers in that vicinity, but now thai they had branches at Auroa, Kapunl, and Manilla, oil would get the benefit, and lio l|op°-| tlint they would all appreciate this by mbitlim use of rlie stores. They had showed a profit of £4OOO, after wMting dowi the stocks carefully, and he said that the wisdom of this policy was reflected liy the fact that though shareholders had placed' no money in the store, which was guaranteed h< ' <|,s directors, in three years they had been able to set aside £12,000 from the profits to reduce tho debt on the store. It was a large business with a turnover of about £IOO,OOO per year, and as th» company had followed a policy of assisting to "curry lit suppliers over the winter, they now had about, £27,000 on the books, and this naturally increased the overdraft. During 1 he year a factory had been h irnt down and a lo.t of wood had also been destroyed, tlifc laier not having beep insured. The sum of £686 had been written off motor lorries, which now stood at £l7lO. This depreciation had not been placed to redemption account, as It was considered to be aciuai depreciation. Tho electric lorry had proved very satisfactory, except they had not aiways power to chr.rge it. He considered 't was the best vehicle they had got, and' had proved a good investment for tho company In time, he honed, all their carting would be done by electric lorry. Their overdraft in connection with the factory stood at £18,307. but against this there were advances lo suppliers of £5099 a_nd owing on mortgage and sale of farm' £ *0,433. so that if bnlh these amounts wore called m there would be very little overdraft. They now had £14.247 on deposit at call. There was, he said, a danger of having too much money at call, and tile directors bad a proposal to put before the™ mat he thought it would be in their ,lnThe company also owed iji.),Bf)o oil mortgage. Thl« included mortgages on properties they had purchased and f.old again at a proSt. and also £6400 which they had obtained from the Government at a low rate of interest to assist !:i providing „ La *t year.tne company paid tliOO mtertft. on .shares, as against £IBOO this year. Owing to the company's policy of purchasing shares, this item did not In', crease very much. Stocks of requisites • "tailed £10,824, as owing to the uncertainty sjirpmß. they had had to carry big stecl-i, Put .:e looked forward to the time when thev would be able to order storks as tliev required them. For the same reason fuel stocks wero C2BGS. The stores in stock were £48,000, an Increase of £14,000. It was considered this was heavy, and the directors Intended to reduce It. He nolntert out tJiat they had yet to receive .£21442 from the Imperial Government as the bal ance of 10 per cent, on the sale of their produce. 1 Though the company only had ji paid-up p o^,?? 4 ' ooo ' » l' e, d shares to the n f'l" ot r! ier com ' )al!| Os, includ- • ,' n tlic E383al Box Company, , hIC \ < ¥ not pay interest . but from whom they had an assured supply of crates, etc. ! owest W'Bible prices. They also had »»■ 2 m Manala tM" Company, which WM i food Investment, apd 6 8488 in ttie

New Zealand Bacon Company, which was suaranteod lo pay 6 per cent. It would not have been able to pay interest If it had to depend on the pigs supplied by shareholders, but had gone in for the Killing of sheep and cuttle, erecting large works in Wellington, and was now making very good profits. A supplier interjected that they would not get any pigs if the company "did not pull up its "socks." The chairman said that they did not mind If they did not get a pig. found at Eltham that they did not got sufficient pit's, and so were fo.rced to waste' the biood, etc! They had therefore erected meat works at Eltham, which were paying well. Shareholders hail not been loyal to the Bacon Company, but hod taken their pigs to a company that paid a%d more. Farmers had been very independent at one time and did not consider the man who had guaranteed £25,0011 to the Eltham company, a mere flea bite "to what' they had to take on when the amalgation took place. After two years however, the opposition dropped out, and they did not now care whether pigs were brought to them pr not. They were anxious, he said, to do all they could to assist the farmer iii keeping up tho price of cattle and pigs, and he could not say that they did not want tho pigs, but he pointed out that if all had been loyal there would have been no need to go in for the meat business. The production of pigs had fallen so that was all the more reason why suppliers should have been loyal and supplied the pigs they had for, as ho pointed out, the company only received 32,000 pigs, which, distributed among Ave factories, means only 6000 each. . A supplier pointed out that he' had taken Pigs to .the company and had received 4d less tlian another concern paid out at Normanby, and 2d less than was paid out at Otakeho, and the following week the company's price jumped Id. This, ho thought, should have Been made retrospective. , The chairman pointed out that very littlo profit had been cnade out of bacon, the profit was made out of moat, and in .reply to a fchareholder, he said that he would certainly advocate farmers • being paid for their meat by weight. » Continuing, Mr. Powdrell said that the company held shares in the Tatea Befrigerating Company to the value of £4981, mostly made up of profits accrued. Coal and firewood had cost £5280, but tho directors had in view a proposal that would reduce this by half. Salaries and wages jilso totalled £12,027. This was considerably higher than the previous year, owing to the Increase! wages rendered necessary by the agreement with the' men. Cartage bail ccst £2310, or equivalent to Ts per ton. and ho thought this was a ccmnleto answer to those who considered the directors would nave been better to have let the carting by contract, rather than by purchasing their "wn lorries.

Their output of cheese and butter durin" the year amounted to £300,000, and would amount to considerably moro (luring tho coming season. They had a considerably increased milk supt', from n<>,ur,2,113 lbs to 03.668,034 lbs., or an increase of over 4 .UOU.OD9 lbs., whilst their cheese yielded psr>9 2-5 tons, an increase of over 300 tons 'l'h's year, he thought the supply would go up considerably. Kfl stressed the point that the company had improved Its position this yc:'.r to the extent of £14,057, made up .1,1 follows: £2159 store .rebate, paid back t * shareholders •ti tile form ot Gliares and bearing 5 per cent, interest; '£1843 depreciation, £SOOO storage; share capital, £655; store' profits, £1772share purchssc, £012; Interest 011 West Coast Refrigerating Co. I'atea Freezing Works C 586, and reserve £ISOO. Many of these items, he pointed out could legitimately have been paid out to supplier!), but In the opinion of the directors it was not sound policy to do so. Ho pointed out that Kaupokonui was the first company to go in for a co-operative creating considerable controversy. Since then, however, there was hardly a factory that had not started a co-operative store lie believed In building up the company hecause they did not know the moment they would have to go In for some other branch of the industry. The directors, he said, had under consideration, the installing of additional electric power at a cost of from £BOOO to £IO,OOO, and he was satisfied that tills would prove a profltable investment for (the company They had two turbines now of 23-h.p,, and os they now used power amounting to 110 or 120-h.p., It would be seen that the two old turbines wore absolutely inadequate and in addition there were all the buildings around to .be lighted. It was proposed to extend the tall ruce and put the power house on the river bank. He had been told that some companies earned f.44 per horsepower, so that they con;;: see the saving ihat would be effected with ilO-hp, and in addition, he said, the of an electric system and motor? eftv-cted a saving in shafting and .belting, if nsedful, he said Ihe scheme could be extended a! some future date so as to generato 200 or 300-li p It was all a matter of mr.nr-.-.

Reverting to financial matters, lie considered that in view of t)i!> nrobable tightening if money Mt would be far-- '•.vier to havo J permanent .raortgcgo of »' fired amount and a small temporary overdraft at the bank, rather than a larger overdraft. This was viewed favorably by the bank, and although "O applications had been called for 'Jchcti'ures a considerably sum had already 'been promised. In this connection, lie ' considered 7 per cent, a fair rate of interest. Their overdraft and money on rail now totalled £74,000, but the bank estimated their assets lit £240,001), and If thev decided to issue debentures for £70,0000, the bank would be prepared 1> lend them another £50.000 if (hey ever wanted ii, which spoke well for llie position of their company. He said that the company had not decided whether to pay cut the whole of the bonus this month but would probably pay half now and the balance neit "month, and he thought that very few companies would be as prompt. Mr. Sandford considered that it was not fair to leaseholders that the reserves should ne built up at their expense for the benefit of freeholders.

The chairman said that was alright from the leiseholders' standpoint, hut there was also the directors' standpoint, and (hey did i'Ot feel like guaranteeing £OO,OOO or £7O 000 for all time for the benefit of the tenant Who dilt not carry any of the burden. Mr Sandford an Id that nil leaseholders could not afford to buy the freehold Some way should he arranged to Rive them a fair deal The chairman considered they had nothing lo complain of,' Continuing, liie chairman pointed out that when they started the factory with a capital of £IOOO as a butter factory, the ba»is of allotment of shares was soih* of butler-fat to a share, and right through ujitll the present, though the company had expanded so greatly, the basis had not been altered, though some other companies had a basis of 401bs. They endeavored to buikl the company up in another way, and the fact that tliey had assets valued at £240,000, as well as £ it',ooo owing to the company/ all run on a capital of £34,000, showed that they must havo good oust) an directors. He then rend a lengthy letter from the auditor favoring the issue of debentures, the formation of a federation of co-operative societies Mr. Powdrell said that the shareholders against Ills judgment, last year recommended Iha di%tors to pay 5s each for veils, and lhe.v lam done so, but as he had warned them would be the case, the rennet market had fallen, and they had to pay £4OO to £SOO more for veil* than they need have done. Tills year, the directors had decided to reduce the price to 3a, » price that would pa}' suppliers well, and lie hoped thatall would supply veils, and so reduce the cost of manufacture of the rennet. The Itennet Company had quite justified its existence, and hut for it there would have been a shortage of rennet last year, besides which there could be 110 doubt that it kept tho price of rennet itawil, He then formally moved the adoption of the report and balance-sheet. This was seconded by Mr. R. Dunn. The report and balance-sheet was then adopted without discussion. ELECTION OP DIRECTORS. Sot the three vacancies on the directorate caused by tho retirement of Messrs. T A. Bridge and T. McPhlllljis by rotation, and Mr! W D. Powdrell, who retired by ballot, there were slit nominations. M.r V. McPhillips declined re-election. He stated that during the war period he had devoted the-whole of his time to public business, and rauist now devote some time to his own business. He stressed the necessity Of electing progressive men to the directorate. and considered that the formation of a federation of companies would be a distinct benefit. Tho chairman said that every director regretted Mr McPhillips retirement from the directorate, as Mr. McPhillips had rendered very great service to the company, and on his motion, seconded by Mr. Candy, it was resolved to place on record appreciation of his past services, end to express the hope that in a year or two his services would bo available for Kaupokonui again, Mr. Powdrell also expressed the hope that i-nother progressive director would be elected Tliey had a company that was in a splendid position, but there was still scope for Improvement. In tills connection, he referred to the development of _the electric power, which It was possible might he made available to the settlers of the district. In returning thanks, Mr. McPhillips said <ha ! Uiei<e was no doubt that shareholders wore gwatly indebted to the directors for the Work they 'did In the company's interests, and he thought that this was appreciated by the shareholders. Bach candidate then briefly outlined his viewß. Messrs. R. Dunn and T. McPliillips were appointed scrutineers, and the election resulted as follows: W. D. Powdrell, M.P. 455, T. A. Bridge 419, F. Muggeridge 269 (elected); A. H. Christie 258, J. Basliford 01, IV. Bradford 28.