REFRIGERATING CO.

Wanganui Chronicle, Volume 83, Issue 38, 15 February 1939, Page 11

REFRIGERATING CO.

CHAIRMAN’S ADDRESS TO SHAREHOLDERS ANNUAL MEETING HELD CHRISTCHURCH, Feb. 9. The fifty-first annual general meeting of shareholders of the New Zealand Refrigerating Company, Ltd., was held at the company’s oilice, Hertford Street, Christchurch, yesterday, Mr. W. H. E. Flint (chairman of directors) presiding. The secretary, having read the notice and the auditors’ certificate on the balance-sheet, and minutes of the previous annual general meeting of shareholders, the chairman said: As the accounts have been in your hands for some time, I presume that it will be your wish to take them as read. I expect that most of you are fully aware that meat companies had a difficult time last year, which is reflected in our balance-sheet, and you will not, therefore, be surprised at the fall in our profit. In nearly every direction, companies had to contend with adverse conditions. The costs of operation at the factories were greatly increased owing to a further steep advance in wages, and in addition an increased cost of works material, while the fail in wool and by-products seriously affected our trading results. We were fortunate in experiencing a good return for our main product, lamb, but mutton and beef met with a very disappointing market. Fattening conditions last year, on the whole, were unsatisfactory; drought prevailing in some districts, while in Canterbury an excessive rainfall caused a surplus of feed and set up parasitic troubles in sheep which farmers found most difficult to deal with, and which undoubtedly reduced both the quantity and quality of the lambs available for export. In the South Island, the average weight was nearly 21b. lower than usual, and the proportion of second quality very much in excess of normal, while the yield of wool per skin was also below normal. In some North Island districts facial eczema among sheep developed alarming proportions, and caused heavy mortality, but fortunately this particular trouble did not develop in the South Island, nor was it very serious in the Wanganui district, where we draw most of the supplies for our Imlay works. Turning to the balance-shee*, there are few items which call for any special commdnt. You will notice that the reserve for rebuilding, renewals, and extensions has been charged with expenditure during the period amounting to £29,829 16s 3d. At our meeting last year an appropriation of £30,000 to this reserve was authorised to meet definite expenditure in sight, and this year we recommend an appropriation of £12,000 which will restore the reserve to £35,279 4s 2d. Having regard to the heavy expenditure which has to be met lor renewals and replacements I am sure you will agree with this recommendation.

The reduction of about £87,000 in bills payable, sundry creditors, etc., is reflected in a corresponding drop in the total of liquid assets on the other side of the balance-sheet.

Land, buildings, machinery, and plant stand at £618,398 17s sci, compared with £610,609 Ils 8d a year ago, a reduction of £22,210 14s 3d. Buildings and plant have, as usual, been maintained in an efficient state. The amount written off for depreciation is slightly in excess of the sum which we are permitted to claim by the Commissioner of Taxes as a deduction from income. We should like to have been able lo write off a larger amount, but as I mentioned when addressing you last year, while taxation absorbs such a large proportion of our profits it is impossible to write down fixed assets to the extent which we would otherwise feel justified in doing. Increased Taxation. Since we last met the Social Security Act has been put on the Statute Book, and in future years a further Is i>i the £ is to be levied on the income of public companies as their contribution to the expenditure involved under this legislation. With this further tax the position will be that out of every £1 of income earned, up to 8s 6d will have to be paid away to the Government; an amount which is out of all proportion to taxation levied on companies in other parts of the world. Land tax is levied in addition, and involves us in a payment of £ll6l. The money to provide for higher wages, shorter hours, and social benefits, must in the long run come out of the products of the farm, and if farming is made unprofitable by excessive costs, an ultimate decrease in production would seem to be inevitable.

The outcome of the latest conference between freezing companies and the Dominion representatives of freezing workers leads me to hope that responsibile labour circles are beginning to realise this danger. At this conference, claims for further wage increases aggregating about £400,000 per annum for the whole industry were made, but after a very protracted and exhaustive discussion it was agred that, subject to some minor concessions, rates and conditions should, remain as at present.

While.this settlement is welcome indeed, the fact remains that since the end of 1936 the annual cost to the Dominion of labour under the freezing workers’ award has been increased by more than £600,000, and when other increases are added, the total is at least three-quarters of a million.

Reverting to our balance-sheet, the item “Consignments unrealised and stocks in work” at £313,415 6s Id, shows a reduction of £83,489 17s Id on last year, and is the smallest figure for several years. In the present unsettled state of world markets, we aim at keeping our trading risk within the smallest bound possible, and our results have benefited by this policy. The stocks have been conservatively valued, and I can, as usual, say that there is practically no element of risk in the valuation placed upon them. Money at short call, and balance with bankers, is down by £42,321. This is partly due to our having been able to employ additional funds in leans to eur subsidiaries which afford I

a more profitable investment for our surplus money. A reference is made at the foot of the balance-sheet to contingent liabilities. These mainly consist of guarantees of our subsidiary and allied companies and involve practically no element of risk. During last year our general manager, Mr. W. O. Campbell, spent some months in England, and was able to bring himself up-to-date in regard to our business at the other end. We have, as you know, a very extensive organisation for handling the distribution of our meat and by-products in the United Kingdom and abroad, and the knowledge and personal contacts which can only be obtained by regular visits are a necessity in maintaining control from head office of our business overseas. We were also fortunate in having one of our directors, Mr. E. Hay, in England last year. Mr. Hay takes the keenest interest in the company’s affairs and gave up quite a lot of time in familiarising himself with our business there. We know that the knowledge he has gained will be of great benefit to us. Development of Subsidiary. In view of the development of our subsidiary, Towers and Company, Ltd., which now distributes the bulk of our mutton and lamb, your board have considered it advisable to place the finance of Towers and Company on a basis which is more in line with the value of the business, and have, therefore, arranged to take up additional shares in the capital of Towers and Company, Ltd., to the amount ol £54,900 (sterling). This is merely an arrangeemnt whereby Towers and Company’s capital has some better relation to the value of the business than has been the case in the past, and does not affect the general position because we hold the whole of the shares in this company. The effect of this increased investment will be shown in our next balance-sheet. I have referred on previous occasions to the growth of Towers business, and I would again like to emphasise the importance of these outlets through which we distribute an ever-increasing quantity to retailers throughout the United Kingdom. Such an organisation, providing a channel direct from the farm to the retailer, is recognised to be of the greatest value from the point of view of New Zealand producers, and no other New Zealand company is in possession of such outlets. The management is very active and most progressive, and the business is economically run, with only a very small amount of capital locked up in fixed assets. Very similar remarks apply to our other subsidiary, Field and Company, which handles the distribution of our casings. This concern has shown satisfactory results, and has justitied our faith in its possibilities. The management is keen and capable, and here again there is only a very small lock-up of capital. Possible Restriction of Exports. In recent months the pressure on the British Government from agricultural interests for further protection has become very pronounced, and it now appears possible that some restriction upon export of meat from New Zealand and Australia will be made in the near future. Any limitation of our export will involve farmers and the freezing industry in further difficulties, and it is unforranate that this agitation has developed at a time when our claim for unrestricted entry for our products into Britain may be prejudiced by the control of imports from Britain into this country. You will probably expect me to say something about the prospects of the year we have just entered. While the international situation remains the dominant factor in all markets, I am afraid it is impossible to hazard a conjecture in regard to the future. All I can say is that the recovery in trade, which seemed to have begun in the middle of last year, appears to have slowed up, and so far as the products in which we are interested are concerned, consumption of lamb is showing a decrease, which is causing us some anxiety, while the market for wool and nearly all our by-pro-ducts shows a declining tendency; we can only carry on and do our best to steer a safe passage through these somewhat troubulous waters, hoping that the lower values now current may increase demand and bring improved prices. Our thanks as usual are due to the members of the advisory committee at Wanganui for the interest which they have continued to take in our business in that district. The members of the committee are Messrs. W. Glenn, W. Morrison and T. Mitchell, and Mr. Gelnn is with us to-day in his capacity as a director. I am sure you will wish him to convey to his colleagues your thanks for their continued services. Picton Works. Members of the company are aware that included in our freezing works is the Picton works, providing facilities for the Marlborough fat stock producers to ship their mutton and lamb either on their own account or by selling direct in the more usual way. In order to give encouragement to the producers in the Marlborough district, which area is showing indications of increasing its supplies, we have made concessions in the prices paid for stock, which we trust the producer will recognise as being our effort to encourage the further increase in quantities prepared for export. In the Marlborough district we have, for the last few years, worked with a producers' committee, and this committee has been very Helpful in the solution of any local problems attached to the operations of the Piqton works, and I would like to take this opportunity of thanking them for their co-operation, and have reason to believe that the action we have now taken in the concessions provided will enable this committee to further encourage the farmers within the province to increase the stock available to go through the Picton works, whether it be shipped by the farmer on his own account to sell through us. or to agents, or be sold to us direct at the .works.

Once again I should like to draw attention to our policy of the open door for farmers wishing to ship their meat on consignments to the British market. We are at all times glad to provide facilities for farmers who wish to realise their meat in the final market, and in this connection we are pleased to say that practically the whole of the meat killed on farmers’

account at our works has been entrusted to us for sale on their behalf. With regard to our recommendation for the disposal of the balance available for appropriation, we recommend the same dividend as last year, absorbing £34,997 Is, to add to the reserve for rebuilding, renewals, and extensions of buildings and plant £12,000, and to carry forward £38,379 Is lOd. I wish to express the directors' appreciation and thanks to our executive, both in New Zealand and London, and to our staffs in both countries. The thanks of shareholders are due to them for the good work done. I now formally move the adoption of the report and balance-sheet. Mr. C. P. Agar, in seconding the motion, stated that the year had been a difficult one, with costs going u-p and markets going down, and he felt that there was some cause for satisfaction at the results shown by the balance-sheet. Whilst it would be foolish to attempt to forecast conditions in view of the unsettled state of affairs both, internationally and in the Dominion, he saw no reason to be pessimistic as to the future. After Messrs. W. S. Newburgh, T. H. Davy, and P. Agar had spoken, Ihe motion was put to the meeting and carried unanimously. Election of Officers. The directors retiring in accordance with the articles were Messrs. C. P. Agar and W. S. Glenn, and in the absence of any other nominations the chairman declared them re-elected. Election of Auditois. On the motion of Mr. P. Agar, seconded by Mr, W. S. Newburgh, Messrs. J. W. K. Lawrence and W. H. Nicholls were appointed auditors until the next annual general meeting, at the same remuneration as last year. Vote of Thanks. On the motion of Mr. W. S. Newburgh, seconded by Mr. J. S. Inwood, a vote ol thanks was carried to the board, executive, and staff in New Zealand and in England. After’ the chairman responded, the meeting terminated.