Thirty-Eight Unashamed Love Affair 1986

CHAPTER THIRTY-EIGHT

Unashamed Love Affair

New colours and a brave face greeted 90 shareholders at the 72nd annual general meeting held in the Athletic Clubrooms, Camberwell Road, Hawera, on 22 December 1986. There was an air of tension and guarded expectation as to what they were about to hear. The drums of discontent had been sounding around the mountain during the past 12 months and anxious shareholders now saw strength in numbers. Many attending were the hard-core, longstanding shareholders whose families had ‘a blood, sweat and tears’ stake in the company, which had been their salvation at times of difficulty in the early years of the 20th century. Now they wanted to make their presence count. This was not just their company, but the cornerstone of the heritage and material wealth that their families had nurtured over generations. They were not about to gift it to the opposition. The hour and day had arrived when they would express their pride and devotion to their own champion rural trading society.

Time stood still as embattled chairman Reeve Williams rose before the assembled shareholders in this most precarious a moment in Farmers’ Co-op’s history. It had survived depressions, two world wars, a raft of turbulent economic difficulties over recent years and a changing commercial environment, yet despite all the deliberation, innovation and best endeavours the point had now arrived when this exhausted board of directors had reluctantly capitulated and were considering the worst possible alternative. The chairman’s own health was beginning to deteriorate from shouldering the enormous pressure and responsibilities he and his team had been grappling with for the full term of his chairmanship. At the same time, the reputation of his family, who had played a pivotal role in the development of South Taranaki during the pioneering days and were known for their integrity and leadership qualities, was at stake and this was weighing heavily on Reeve Williams’ mind. Despite his deteriorating health he had clearly demonstrated to his fellow directors his desire to see the episode through to its conclusion. His stoic stance had been supported by the board.

Speaking to the meeting the chairman said that, ‘everyone will be only too painfully aware of the unparalleled economic circumstances that the Company has had to operate in for the past year’. It had been stated at the annual general meeting the previous year that plans had been formulated to cope with the future, ahead of the opinion of many at that time, but in reality, apart from continuing spiralling interest rates, nothing had really changed. Plans to deal with the problems had been formulated and progressively carried out through the year but there was still ‘little light at the end of the tunnel’ as far as the external economic environment was concerned. He spoke of the disposal of poor-performing operations and said that significant moves would be announced within a few months. He requested the meeting’s patience because any premature announcement could prejudice negotiations, to the ultimate detriment of shareholders.

Deputy chairman Peter Blyde introduced Mr Trevor Harrop to the meeting as the new company

secretary, and then announced the company’s recommendation not to pay a dividend in view of the poor results. He expanded on the losses and causes and advised shareholders that although all were aware of the uncertainty about the future, ‘it was not a topic for discussion at this meeting’. The board and management would continue to seek the best independent advice, as they had done in the last year through Arthur Young Management Services, and would work to look after both staff and shareholders’ interests. Mr Evennett expanded on certain aspects of the company’s activities in the past year, stating that the strategy had revolved around regrouping activities in Taranaki in the stock and station operation and general retailing. Divestment of all retail and stock and station activities in Manawatu and Wanganui, including retail stores at Marton, Wanganui and Feilding and livestock operations relating to the Fordell and Feilding saleyards had been completed as well as a major part of Taranaki Farmers’ motor business in Taranaki and Wanganui. The finance company’s growth had trebled from $3m to $9m within one year and steps had been taken to improve management and the level of stocks and debtors. He referred to the external situation, which revolved around interest and exchange rates, supply and demand, the general economic downturn and the increase of unemployment in the province with real incomes and the level of spending still declining. One of the fundamental problems was the lack of equity capital and having to borrow excessively at high interest rates in order to fund the business. He indicated that the company was not alone in such difficulties, which had also resulted in the recent merger of Dalgety Crown and Wrightson NMA.

The meeting was liberally seasoned with shareholding staff and a number of the more outspoken protagonists of the FCOS brigade who were primed and poised to enter the debate. The first to take the floor was Waverley’s Brian Train, attending his first Taranaki Farmers annual general meeting, who asked why forward cover wasn’t taken at the time of taking out the overseas loan. Mr Blyde replied that ‘The option was recognised and expert advice had been sought and advice had been that it was better to take the risk’.

Although the loan had been taken out before he had joined the company, Mr Evennett stated that, ‘The interest rate had been very favourable at 6.5%. At that time our internal borrowing rate was 24%, a rate that the company could not afford.’

A succession of other speakers rose to question decisions made and general management of the company, including Messrs Dickie, Pedersen, Winks, Bourke, Morse, Ashton, Brown, McIlwraith, Todd, Warren, Mullan, Hunt, Smart, Kavanagh, Ellingham, O’Brien and Richardson, all gave vent to their concerns over the cost of restructuring, the reduction in staff from 700 to 400 and many other matters. The discussion concluded with Mr Dickie stating, that questions had to be asked on performance over the past year. Shareholders are here today because of their concern, they are concerned for the Company’s future, and there have been disturbing elements in the rumours circulating. In general business Mr Train moved that more information, in the form of a breakdown of activities, be given in the annual report. This was seconded by Mr Morse but Mr Ashton felt that this should be a recommendation only. Mr Blyde said the board would take notice of a recommendation. Mr Train, replying that he preferred the motion to stay, stated that if the balance sheet had provided more information there would not have been so many questions. Further discussion ensued, with Mr Train, in his right of reply, stating that a breakdown in great detail was not required but future balance sheets should give data separately for activities such as stock and station, finance company, retail and merchandising sector. The motion was carried 30 votes to 24. The meeting had now been in progress for three hours and a resolution, that a shareholders’ meeting be held in July or sooner if extraordinary circumstances arose, was carried.

The meeting concluded with a presentation to Messrs C. A. Downs, R. W. Green, and F. G. Hendrick in recognition of their 25 years service with the company. Thanks were accorded to the

staff for their loyalty and enthusiasm, to the board of directors for their time and effort on behalf of the shareholders, and finally Mr Williams wished everyone the compliments of the season, with the hope that the next year would be a more successful one.

Immediately following the meeting, directors met in the Regent Street boardroom to elect a chairman, deputy chairman and appoint an executive committee and directors for the subsidiary companies. Mr A. G. R. Williams vacated the chair and Mr Evennett called for nominations for chairman:

Mr A. G. R. Williams was nominated by Mr Veitch and seconded by Mr Death, with Mr Veitch stating that nomination was on the understanding that it would be for a temporary period to assist the company in its current negotiations. It was still Mr Williams’ wish to alleviate some of his workload in the future for health reasons.

Mr Blyde who had also accepted another term as deputy chairman agreed that Mr Williams should continue in office and thanked the board for their support. The chairman, deputy chairman and chief executive officer were thanked for the way they had handled the questions at the annual general meeting.

The board of directors now comprised: A. G. R. Williams, chairman, P. McC. Blyde, deputy chairman, I. D. Adamson, R. L. Bremer, P. E. Bulfin, R. A. Death, J. A. Halton, T. J. Jamieson, J. A. T. McEldowney, P. A. Murdoch, J. P. V. Norman, D. B. Sarten, B. D. Veitch, with T. J. Harrop company secretary.