THE W.F.C.A. LTD.

Wairarapa Times-Age, 4 October 1938, Page 8

THE W.F.C.A. LTD.

POSITION OF COMPANY STRENGTHENED CHAIRMAN’S REVIEW AT ANNUAL MEETING TODAY COMMENT ON HIGH TAXATION AND COSTS A considerable strengthening of the company’s position, in spite of trading conditions during the past year having been in some respects abnormally difficult, was a feature brought out by the chairman of directors of the Wairarapa Farmers’ Co-operative Association Ltd (Mr V. E. Donald) at the annual general meeting of shareholders held in the company's Queen Street office today. Moving the adoption of the directors' report and the balance sheet, the chairman reviewed as follows the operations of the company, and made some observations on the general outlook: — “The turnover in the merchandise departments showed further expansion over the previous year, and actually reached the highest figure since the year 1930. This enabled the gross profit to reach £102,235, which was slightly, in excess of last year. As against this, however, overhead costs showed a substantial increase of £4009, largely due to the result of legislative action over which we have no control. These additional costs did not bring a corresponding increase in the gross profit.

NET PROFIT SHOWN. “After paying interest on debentures, amounting to £3OOO, depreciating plant and fittings £2639, expending a sum of £2449 in alterations and renovations at Wellington, and other branches, and fully providing for all bad and doubtful accounts, the net profit amounts to £13,568. lam pleased to advise that this net profit will extinguish the balance of accumulated losses of past years and for the first time since 1930 the profit and loss appropriation account exhibits a credit balance. It has been deemed desirable to adopt a prudent policy, and out of the net earnings, the sum of £3OOO has been placed to a general reserve account, a further £lOOO transferred to taxation reserve account, leaving the profit and loss appropriation account in credit, to the extent of £ 1740. THE DIVIDEND ACCOUNT “Your board considers it inexpedient to actually distribute this remaining balance, but recommends that it be transferred to the credit of dividend account, thereby expressly earmarking it for inclusion with next year’s profits for distribution to preference shareholders. As the cumulative dividend attaching to the preference shares accrues as from August 1, 1938, your directors hope that the above credit balance, plus future profits, will make possible the. payment of dividends to preference shareholders in future years without intermission. “Shareholders will note that, apart from the elimination• of the old deficit, the financial position of the company has been considerably strengthened. A commencement has been made to set aside reserves to take care of contingencies; the bank overdraft has, during the year, been reduced by £21,380, and is actually lower than it has been since the year 1919; adequate provision has been made for possible losses in bad debts, and all adjustments as a result of the hearing of cases before the Adjustment Commission, dealing with applications lodged under the Mortgagors and Lessees Rehabilitation Act, 1936, have been made stock in trade, plant, etc, have all been conservatively valued; and all contingencies provided for to the best of our knowledge.

LAST YEAR’S ADJUSTMENTS. “Following the annual meeting last year, an extraordinary general meeting was held, and the necessary resolutions, revising the company’s articles of association which required remodelling, duly passed. Your board is seized with the importance of making our shops attractive, and during the year ■all branch premises have been repainted and brought up to date, the cost thereof having been borne out of the current year’s revenue. Directors during the year have inspected all branch premises, and will do so again in the near future. At the Wellington branch fairly extensive alterations were carried out. and I think all shareholders in that city will agree that the general appearance shows a great improvement and should facilitate the obtaining o. additional business.

AN UNJUST IMPOSITION “We have frequently drawn attention to the injustice meted out to oui company and others similarly placed, in the imposition of graduated land tax. Despite the fact that certain branches have been unable to earn a net profit, or only one of modest proproportions, we are called upon to pay land tax aggregating £1703 against £238 two years ago. Legislation made provision for the granting of relief at the discretion of the Minister of Finance. In view of the fact that shareholders have not received any dividends since 1925, the capital of the ordinary shareholders was reduced to provide for past losses, and toe preference shareholders agreed to forego cumulative dividends, it was considered we h’ad a just claim for the granting of relief, and made application accordingly. I can only assume that the desire to secure taxes outweighs the merit of relief, as our application was refused. The additional tax of £l4OO edd is a most unjust. one, and must come cut of the pockets of the shareholders, as it is impossible to pass such a charge on to the public. “The average holding of ordinary shares is only 41 shares, and including preference shares, the combined nominal capital is approximately £66 per head value; so it is only l too apparen. that the tax so far as our company is concerned is a most iniquitous one. Likewise, the additional burden, whereby a social security tax of Is in the £lof profits earned, has recently been imposed upon public companies. If companies were to receive some benefits from the social security legislation, there might be merit in the charge—but it certainly looks as if the Government has realised that Is in the £1 from individual incomes is likely to fall short of the cost of the scheme, and has looked round for an easy method of collection, hence another most unjust tax. WOOL BUSINESS “With a view to consolidating our position, we have leased our wool stores at Thorndon Quay. Wellington. This does not, however, mean that we

are relinquishing our wool businesson the contrary, we hope to give our clients a greater measure of attention and care than has been possible hitherto. Satisfactory arrangements have been completed whereby wool being offered on behalf of our clients during the forthcoming and subsequent seasons will be included ih the catalogue of Messrs Levin and Co Ltd., and actually offered for sale by that firm’s auctioneer. In these arrangements our own valuer’s services have been retained, and he will attend to the cataloguing and handling of our client’s clips, and thus they are assured of the same personal attention as in the past. There will be this added advantage—that our clients’ wool will be included in a much larger catalogue than we ourselves of recent years have been able to offer.

RISING COSTS “Despite a substantial drop in the realisation of our wool, our exports reached a total of £61.9 millions, an enormous total, which has only once been previously exceeded, namely, in the previous year, when it reached £64.6 millions. This resulted in free spending by all members' of the community up till about six months ago, when a decided change took place. From then on, decreased spending, and rising costs of all services, land tax, rates, advertising, wages, etc., has made profitable business very difficult. It is well known that two-thirds of our export income comes from farming operations, but owing to the huge public works undertakings, it is becoming increasingly difficult to secure farm labour. The absorption into private industry of the many thousands of workers employed on public works, is a problem that will have to be faced and far-seeing individuals will realise the necessity of considering this matter in the not distant future. “V/e cannot ignore the warnings issued frem Geneva regarding world conditions—the fact that America, despite bolstering of industries, is apparently suffering a major slump, and the fact also, that apart from activities occasioned by rearmamen't, England is suffering an increasing unemployment problem. Let us hope that the clouds overhanging Europe will soon disappear, and the world assume a happier atmosphere. “I wish to thank members of the board of directors for their assistance during the past year, and also our General Manager, Mr Cunningham, and his staff, for their loyal co-operation."