W.F.C.A. LTD

Wairarapa Times-Age, 2 October 1939, Page 6

W.F.C.A. LTD

TURNOVER HIGHEST FOR NINE YEARS DIVIDEND TO PREFERENCE SHAREHOLDERS. REVIEW OF COMPANY’S OPERATIONS AT ANNUAL MEETING. “I am pleased to say that although in the early months of the past financial year trading conditions were by no means buoyant, business picked up wonderfully well as the year progressed,” and the year’s turnover reached the highest figure since the year 1930,” .said Mr V. E. Donald, chairman of directors of the Wairarapa Farmers’ Co-operative Association, Ltd., when moving the adoption of the balance sheet and report at the annual meeting of shareholders, held in the company's office, Masterton, this afternoon. “The gross profit amounted to £103,442 against £102,235 last year, an increase of £1187,” said Mr Donald. Overhead costs have been as rigidly held as possible, and which enabled us to show a decrease under this heading of £1122, which compares favourably with 1937 when the increase was £7213 over 1936, and in 1938 when the increase with the previous year was £4009. After paying interest on debentures, amounting to £3opo, depreciating plant and fittings £2506, expending a sum of £l9lO in renovations and alterations, and also depreciating buildings to the fullest extent allowed by the Income Tax Department, as a deduction from earnings for income tax purposes, and which accounted for £2938, there remains a net profit of £15,738, against £13,568 last year, an increase of £2170. "This profit, together with the balance of £1740 carried forward from the previous year, makes an available sum of £17,478, which the directors propose to deal with in the followingmanner: — “To transfer £3OOO to taxation reserve account, bringing same to £BOOO. "To transfer £5OOO to general reserve account, bringing same to £BOOO. “To pay to preference shareholders a dividend of 3 per cent out of this year's profit, and a further i per cent of last year’s credit, making 31 per cent in all, and absorbing £8750, and to carry forward the balance, namely, £728. FINANCES STRENGTHENED. “It is very gratifying that the result permits of a - resumption of the payment of a dividend to the preference shareholders, after a lapse of nine years. The financial position has been further strengthened by the addition of £.5000 to the reserve fund, and an analysis of the balance sheet will indicate th'at the asset backing for preference shares has increased from 17s 6d per share in 1933 to 22s 8d per share in 1939. Stock-in-trade at £149,004 is higher than at last balance date by £11,876, but the possibility of shortage in certain commodities, and ' the probability of rising costs, induced us to take measures to carry extra stock in order to look after the requirements of our clients. Plant has been kept up to date and adequate depreciation has been provided. Our buildings have been kept in good order ,and alterations and renovations totalling £l9lO have been written out of revenue.

“Although the enhanced value of the land upon which our buildings are erected, particularly in the larger centres, more than covered any depreciation on the buildings themselves, we considered it desirable to provide out of revenue a sum of £2938, being the full amount allowed by the Income Tax Department as a deduction for depreciation for income tax purposes. We are sorry to note that no relief of the graduated land tax has been granted’ by the Government. As mentioned last year, the imposition of such a tax upon trading concerns is most unjust, and places upon small country branches a heavy burden. It is satisfactory to note, however, that it is proposed that land tax levied on land used in the production of assessable income may now be claimed as a deduction for income tax purposes. CONTROL OF IMPORTS. I “In December of last year, owing to the rapid decline in sterling funds, the Government decided to control imports, which from that time have only been able to be brought into the country' under permit. A tremendous amount of work is involved in preparing the necessary applications, and up to the present the relief expected by the Government has not been forthcoming. Trading concerns have been very embarrassed in many instances where permits have been received, and in good faith orders supported by such permits, have been placed with oversea houses, only to find that the sterling funds are not now available. It is a most extraordinary position that with an income which during the past four years totalled £N.Z.238 millions, compared with £N.Z.164 millions for the preceding four years, wc should now find ourselves with such a shortage of; sterling funds. It is true that we have been over-importing goods, but the real reason for the decline in sterling is attributable to other causes as follow, namely:—Flight of capital overseas through want of confidence, and reckless expenditure on unproductive Public Works.

“There has of recent years been a tendency to spend right up to the hilt, and I can only suggest the folly of such a course, whether in Governmental or private spending. The so-called capitalist has been considered fair game, but it is now being realised that nearly all are capitalists in a greater or lesser degree. The worker who is paying off a house, or building up a reserve for a rainy day, should be encouraged in his efforts. Even the larger capitalist, of whom New Zealand has remarkably few, has a place in this world, so long as he is utilising his capital in a manner which gives employment to otherpeople. Unless there is saving, life comes to an end —we have only to eat all the potatoes of this year’s crop and there would be none next year, or consume every egg laid, and eggs and poultry would soon be eliminated from otn - diet. So it is with capital itself, ahd every encouragement should be given to enable reserves to be built up for that rainy day which will always arrive in our lives. BURDEN ON COMMUNITY. “Our individual wealth is admittedly one of the highest (if not the highest) in. the world, but it is questionable whether we can go on increasing cm - State indebtedness, which is rising to a very high figure per bead of population, without placing a heavy burden upon our shoulders. Our State and local body indebtedness now reaches a

total which means that for every child born in the country a first mortgage of approximately £240 is'placed upon its head. Taxation has now reached £23 8s 9d per head of population (exclusive of local body taxation of approximately £4 per head) or the astonishing total of £27 8s 9d. “Heavy increases in taxation are provided before the House, the basic rate for individuals being increased from Is 8d to 2s in the £l, and the general exemption reduced from £2lO to £2OO. The basic rate of company taxation is increased from Is to 2s in the £l. Petrol tax has been increased by 4d per gallon. Railway rates, which wore increased by 10 per cent in December last, have-, so far as Masterton is concerned, been further substantially increased from July 1 for ‘A, ‘B and C classes (which covers most lines of general merchandise) from 35s to 42s 9d per ton, an increase of approximately 29s per cent. _ The Public Works programme provides for an expenditure of nearly £24 millions this year, of which £l9 million is to come from loan money. Although this is a productive country, we cannot stand such an orgy of practically unproductive expenditure. FARMERS’ POSITION. “Farmers have not had a good season. So far as the sheep farmdr is concerned, a greater weight of wool was, fortunately, produced, and at the Wellington sales an extra 19,112 bales of wool were sold, but the average price per bale was £l4 4s Id, against £l5 0s 8d in 1937/38, and £23 8s 9d in 1936/37. The arrangement which we entered into last year, whereby our clients’ wool was to be included in the catalogue of Messrs Levin and Co, and ‘■uch catalogue issued as a conjunctional one, has worked very satisfactorily. Our own valuer’s services were retained, and he personally attended to the cataloguing and handling of our clients' clips. We again solicit the support of our wool clients for the forth « coming season. The dairyfanr|.r suffered a decreased production of butterfat. owing to the extremely dr? season, and his costs are still rising.

CONFLICT IN EUROPE. “We all deplore the fact that Great Britain and _ the Dorninions are involved in wax’, and trust that it will be of short duration. No other course was open to Great Britain in the action she has taken, and it must be a source of satisfaction to her to have received the wholehearted support of the Dominions in the effort to bring about the overthrow of Naziism, with its cruelty and misery. Many lives will be lost and property destroyed, in the struggle for freedom for the down-trodden countries of Europe, and we can only hope that out of the’conflict a lasting peace will evolve. Wc, in New Zealand, will do and are doing our part—our young men are already mooting the call for recruits, and may bo called upon to serve overseas. Any members of our staff who may be called upon to serve either in New Zealand or overseas are assured that their jobs will be open to them upon their return. Business must be carried on as usual, and every effort made to increase production, and thereby help the Old Country to the best of our ability. The special war Budget places additional burdens upon taxpayers and the community generally. Such extra taxation will be met willingly, as we all recognise the necessity of rendering help to bring the war io a successful conclusion. It is hoped, however, that the Government will make substantial savings in its Public Works expenditure and divert for defence purposes at least a substantial portion of the amount which has already been voted by Parliament.

“I wish to thank the members of our Board of Directors for their great help during the past year, also Mr Cunningham (our general manager), and the staff, for their loval co-operation. May I also suggest, that the shareholders give us their support during the coming year. The business is theirs, and its success can be assured by their cooperation.”