Annual Meeting of Shareholders. WAIKATO CHEESE AND BACON FACTORY COMPANY.

Waikato Times, Volume XXVII, Issue 2193, 29 July 1886, Page 2

Annual Meeting of Shareholders.

WAIKATO CHEESE AND BACON FACTORY COMPANY.

Til.': annual mooting of shareholders in this cv>i'i|)»ny was held ;it the Hamilton Auction M.at on Tnoiday evening. The Chairman of director.-*, Mr S. T. tteddon, occupied the chain, und the following shareholders wera present :— Messrs Yon. Btnrmer, Barugh, Capt. McPneisou, Messrs Peat, J5 vans* Trewbeellar, Bell, MoUille, ( Thomas, dipt. Steole, Mcsiirt Smith, H, Stu*le, Way, <t. Edgecumbe, frillet, Wood, 11. I<\ ttandes, Honeyhun, Cochrane, Knox, French, fcJwai brick and Runcijman. The Chairman opened the proceedings by reading the advertisement in ThejWaikato Times calling the meeting* .He then read the balance sheet, (a copy of which hM already appeared in our columns), and the following report : — niKucroßs' report. Gentlemen,— ln presenting the * fourth annual report your directors regret €hat th« accounts disclose a considerable deficiency on the year's operations, notwithstanding the fact that the price of milk supplied to the factory was reduced this year from fourpeuce to threepence halfpenny. The lo&s i-5 apparently gi eater this year than last, but not so great in reality, as a careful examination of the balauce-bheet will show. The heavy loss on Ja*t season's cheese, caused by this commodity falling in price in the Home market from 7tis to 3Gs per cwt-., would have been shown in last year's balance-sheet had the particulars been in the director's hands. This season's cheese in .stock is all «old at a price to cover that at which it has been valued. Butter: This branch shows a slight loss, but it is probable that there will bo a small after profit when it is all sold, as it haa only been climated at lid per lb., and from account sales lo hand appears to be com* mandmg a very high price, i. c. Is 3d to Is 4d per Ib. Our machinery being now in thorough working order we are turning ouL the pound of butter from far less milk, I'igs and bacon : This branch bhows * slight profit. Tho bacon realized the price at which it was estimated all, but a little retaken into stock at 3d per lb., which givei a loss of some £30. The actual profit on the pigs alone i* therefore over £40, and seeing bow thoroughly glutted the market has boon this year we could not ; expect much more. The pig-son hand (some ISO) have been estimated at a low piice, and we trust to bring forward an extra profit on them. t'JO has beon written off for depressjpn on plant and buildings. Without this our actual woi king lo.ss ib only £1.30 odd ; considerable in.) rovoment-> have been made, and they i c illy are in bettor condition than at the bi-gimiing of the season. Bad debts, we have none, the book debts showing have / artly b^en paid since the books were closed, and will be dining the month. Accounta owing and bills payable : are chiefly for the Ja.>t two quaiLcW milk, and will be paid m due course. Interest : The company has paid 1L 2«l interest on unmoy borrowed tor tlie puipu.se of carrying on tin* business ol the company. This charge accounts for more- than the entire 10-s, on the yen- * woiking, and constitutes a ourden that mu»t lender the profitable winking of the company almost impossible. Having it»g:»rd to this f.ict and the diminished uipital of the company, yonr diicctors .ue reluctantly compelled to ad- \ i.^o Llic»t hi oider to .hlvu further lass to the •<hai'eholdf»rs, it i-* necessary that the capital cii rangi'inents of tiie company should bo tutuely leoo^nihed. In moving the adoption of tho report the Chairman .said : — 'J-entlemen, — I am painfully aware that our balance-sheet must be very disappointing to all the shareholders. As chairman of this company from itsi initiation, 1 am only too well aware of thy causes which have led up to our piesent very uufoitumilc position. The directors have always woikod ii.mj for 'sueces-, b.ib hno mo-Jo siuno inist,ikes. The iii&t, and srieatcst, uws m puiohising much tuorj land than was necj-siry, and more than we had money to pay for. la the second place, w • hive paid higher ww^e* than the industy justifies. I am satisfied that no dairy c-omonny cm pay its manager JJOO u,-ymr M\d (is ior_ day labour. Wo h.ue tried hard to iiCßp"doun e\pensos, but unsuccessfully, and I feel confident that if a dairy m.vn ot sufficient mean* to carry on the industry was t.i undertake tho work, he would s-icceed wiit^e we as a, company have failed. Mv Bvrugh seconded the motion pro forma. He was ceitamly not satisfied with the working of the company, and would be glad if all those present >vho had anything to say about tho management would express their opinions freely. After a paut>, j , Mr T. Tiewhellar said he had waited for some of tho larger shareholders to speak, but failing tlioxj he would make a few remarks. He need not lemind thorn that they weio all deeply interested in the industry. Foi- himself he had always felt that tho gentlemen who organised the company vveie men with n large stake in the district, who would do their utmost to win success, and for that reason he had been content to leave the management in their hands from year to year. Unfortunately each year had shown a loss, and it now behoved them all to endeavour to face the difficulty, find out the causes of the Kss, and remove them if possible. Now invoking over the balance sheet he fouad-^fiiat on deducting tho cost of making the cheese from its value when nude- there remained a profit of £504. Where was the lohs, and was the loss unavoidable ? The Chairman said the company had sustained losses for which tho directors emild not be held responsible. The loss on the London shipment could not have been provided asrainst. They thought the London market was the best, and they .sent the cheese there in what was acknowledged to bo the biist month, a month when it usually fetched about £70 a ton, aud they got less than £40. Their shipment, moroover, was the only one he had heard of getting damaged. Notwithstanding this it brought about £2 a ton more then othei cheese from the Waikato. Such a drop in prices had never been heard of before. He had heard that Waikato cheese had beeu retailed in London at 3d per lb. Tin directors were satisfied thnt their agents wore not to blame. Again, the loss coulc be partly accounted for by the large amount paid away for interest. The pigs, also, had not made the money they ought. Th< amount of profit shown on this item w*: simply absurd. In some dairies tho profit on pigs was sufficient to pay tho manager's wagos. It was true that they had to pay « considerable sum for winter (wd, swodes, &c., as, though they had 70 aoies of laud, they had not made pi ovision in that direction. This ve.ir they had dsno so. He believed, further, that the pigs weie overvaiu'>J in last year's statement The bjcvii, with the exception of GOOlbs taken into >ti>ck at 3d per lb, had fetched fail puce.s. Mr Trewhooll.ir said it seemed strange to him that pm«?te individuals could makt a pioht out of the industry, while a company possas^d >£ every appliance, abundance o the light kind of food. <fee, should fail. Hi thought, they should make a seaiching c\ animation, in _ order that such lobses migb bo avoided in tho future. Was it no possible, to get a manager who would wori on share* ? ' - The Chairman said the best manager wa the man who could makp good choose fi-or minimum quantity of milk. Ten pounds t; milk ought to make a pound of clicese That amount had been found sufficient i America, and in one dairy where Avi>hii cows were milked D.Ubs'had been'foun sufficient. In the Waiknto factory t\ quantity of milk required had increasu each year. At first it was lOlbs 30a., the it took lOlbs auz., and lust sea^uu U quantity required was lOVlbs. They migl lie getting experience bntthey were p ( \yir deary for it. The capital ot tho compai h »d b'^en eaten up. M Swarbrick said that it was to indn t ie ..t this 'md they must look for tl tutuiedev lop n»»t of farming in the W* k«t>. It was i.ot ueees«wy, however, f «un to cnlarere uoonthis. n^RH 11™^ «/^

of one mind on that point. The practical question was, how could it be profitably maintained? Two years ago, when he joined the boaid, ho had stated his com ietion, that whilst the business in itself was j'sound and fairly profitable, the com*o P an y» owing to its financial arrangements and capital expenditure must come to grief within two years. This term had now expired, and he was sorry to say that any one "who studied the accounts must agree with him that the time had arrived when they must either maki>an enthely new dep.uture or else shut up the factory. At present the company labouied under four gieat evils which must tender successful working impossible. Fir -t, their capital was altogether inadequate to their requirements. From the balance-sheet it appeared that after deducting losses theie «till lemaincd £177-"> of the shareholders money: But of this £970 had not yet been p.ud up, leaving £800 as the amount nominally in hand. But among their assets vine the land, buildings and plant, which were all bet down at the actual cost. Ah a matter of fact, these assets were not now woith near the amount they were set down at, and the difference between their nomin.il value and their actual value exceeded £800, and so in reality the shareholders had not one farth-i-ipg iv the business, and the company was trading on money supplied by the bank on the poisonal bond of the directors. It \va> impossible to continue such a system as this. In the second place the company was fattoo heavily weighted with the cost of their land, buildings and plant. They had invested no less than £900 m laud which, for the purpose of their business, was not worth more than £200. Also, owing to the * novelty of the business and want of practical experience their building and plant had cost far more than they could now be erected for. In reorganizing the company these things must be taken at -" their actual value, and the difference practically wiped off as a bad debt. In the third case the factory was not producing the due amount of cheese from the - Juflk. This was the vital part upon which the whole question of successful working depended. He had, as one of the comttiittee of management, carefully studied this part of their woik and examined the authorities on the matter, and he was convinced that they ought not to rest satisfied with less than one pound of cheese for every ten pounds of milk. Had they done this in the past yeac they would have increased their receipts by £210, and * Jiave had a small profit on the year's working. This question was a most complicated and difficult one, but by careful study and attention the results indicated c6uld be attained. The last evil to which he referred to was the excessive expenditure. r A great deal of this was really a matter of account and did not apply to the actual year's working. At the commencement of the year they had on hand a large stock of cheese and bacon, which were debited against this year's expenses at a far higher figure than they ae- * tnally realised. These losses were therefore really made in 1885 and not in 1886, as would appear by the accounts. Again, at the end of 1885 there were left on hand a large number of inferior pigs, which were credited at a high value, and no provision was made for feeding them through the winter. In 1880 they had to take over these pigs, and pay mi nous charges for „ wititer feed. At the present time they had brought this branch to a really satisfactory footing, the result of which would be seen in the next year's working. Speaking as . one of the committee, he had no hesitation in saying that an examination of their affairs would show that during the past season they had worked to far greater advantage than ever before, and had paved the way for more economical working in the future. It was possible to remedy the two evils in the woikmg of the busings, but the difficulties as to cipiul and general finance still remained, and the point for them to deal with that night was ho.v to put the company on such a financial basis that it could continue Us operations with a fairpr >spectotsiuer->-. Looking to the future, several difficulties presented themselves. It had been suggested that the pi ice of milk should bj reduced to 3d per pvillon, but he was convinced that :\t such a price the necessary supply c.mld not bf» obtained. To carry on the- busim uo.ild requite a con sider.xblf addition. tl -urn of money in hand, which would ni'c^wtnto the calling up or the remainder of the cipital. But this could only be clone by consent of the mort gagees, who had a lien on it, and he did notthink it likely they would forego their lien. Again, the <•!). upholders might refuse t>> sanction finther call-. Shorld either of these difficulties atisr", there would be no alternative but to wind up the company. But even if the additional calls were made they would -till inquire about £1000 overdraft. This could only be obtained on the personal bond of the due-dor*. The. speakei explained the nit'i-o anil histmy of th bond at present held by the buik, and he said tint none of the directors would .sign a new Ivmd or thii> kind, and in fact it wamonstrous t<) ask .my t<> incu: such a, grave and exceptional liability. Failing thi-, they had no alternative but ;i compulsoiy winding-up of the company. In such an ewntu..lity the proper fry of tin 1 company would tolise only a nominal sum, and the b .lance would have to be made good by calling up the whole of the capital, and even then thp directors would piobibly have to make good a deficiency out «.f their own pockets. The problem foi them to solve was how to keep the fuctwry apen. .nicl save tlie shareholders from further loss. He was convinced that the business in itself was perfectly sound, and with the experience and improvements this year could be made to yield a fair return. All that was needed was a fresh start on a sound financial basis. They must shako off the burden of capital that was really lost and gone, take the land and appliances at their present real value, and have cash iv hand to carry on the business. He believed a new company could be formed to take over the company on such terms, and so save the present shareholders further loss. He had therefore prepared an amendment as an addition to the motion, embodying these views. He was convinced that unless some such friendly arrangement was come to, there wa<? no alternative but wind up the company, in which case the shareholders would* have to pay up the whole of the capital iustead of I, as he proposed. He therefore moved the following amendment : — That any attempt to continue the working of the company on its present financial basis can only result in fmther loss to the shareholders, and that the directors are requested to arrange to wind up the com pany on thebasn that the shareholders are relieved from all further liability on payment of the 13th call. Capt. McPherson was delighted with the proposal so ably put forth by Mr Swarbrick, and would second the amendment with a great deal of pleasure. He had come prepared to move that the company be wound up, as it was plain to everybody that it was bankrupt. He was dissatisfied with the balance-sheet, which ought to ha\e been cast in a much simpler form, so as to show at a glance the position of the company. Mr Trewbeellar opined that if other people could carry on operations the present company could do the same. Mr Swarbrick said the reply to that was that the present company bad spent all its capital ; it had come to the end of its tether. The new company would have this advantage, that the loss in land and buildings, &c, would be wiped out, and it would have cash and credit, requisites which the present company did not possess. Capt. Steele cordially supported the amendment. He would be a great loser, but he was quite content, as the industry would be carried on on a much sounder basis. The shareholders in the new company' would .ill be suppliers, so that no half-dozen men would be called upon to be guarantors. He deploied the case of the nw-tnippHars, but that suggested was, he -considered, the only way out of the Replying to Mr B.irwcll, the Chairman said the number of shares which suppliers would be required to take in the new company would be a matter for arrangement. It had been sugge«tpd that two shares for each gallon of milk supplied ncr day would be a fair proportion. After some fmther discussion, relating chiefly to matters of detail, the amendment was carried unanimously, and the report as amended was then adopted. Election of Directors and Auditors. The retiring directors, Messrs Seddon and Kunciman and the roth ing auditors, Messrs George Edgecumbe and A. Campbell, were re-elected.

Votes of Thanks. The Chairman moved a hearty vote of thank, to the hon. secretly, Mr Kiiox, and t ho aasisU.it «?ci-etaiy Mr Carter for the very efficierfc way in which they had conducted the comply \s business during the year TVIr Knox had not only Riven a preat imoimtof lifetime, but had kindly given theSKe freeze of his mart, prouding l&hta, &c.' He tliou ° ht they were veiy piuch indebted to linn.

Captain Steele seconded the motion. Mr Knox, in responding, regretted the position of affairs, but felt assured that it was unavoidable. Votes of thanks to the directors and the chairman closed the proceedings.