Board-Room Headaches for Morris

Hedstrom Limited

ALTHOUGH the gross profit made by Morris Hedstrom Limited in trading in the Central-South Pacific, in the year ended March 31 last, was the largest in the Company’s 40 years of existence, and the net profit (£90,839) was “satis factory,” the chairman (Sir Maynard Hedstrom) told the shareholders at the annual meeting last month that he was not happy about the position.

Operations, in many respects, had not been carried out efficiently, he said; full advantage had not been taken of the trading opportunities created by the large volume of money in circulation in the Islands; and the Company’s plantations had not had the full advantage from the high ruling price of copra.

Sir Maynard explained that this was not due to any failure on the part of existing staff, but mainly to the fact that the Company simply could not obtain the number of competent men whom it needed for its various opera tions. This condition —common through out Australasia—had nlaced the Company under a severe handicap.

This company, trading in Fiji, Tonga and Samoa, has a subscribed canital of £739,613, and it has nearly £1 million in reserves and P/L Account. On the assets side of its balance-sheet it shows no less than £799,740 in cash and investments— £3ls,ooo of it in actual cash or at short call. Only some £70,000 per annum is required for the customary 10 ner cent, dividend. Little wonder that the Direc torate laments the lack of investment opportunities in the Islands under the post-war Socialistic set-up!

The other two big Islands trading com panies met a similar situation in different ways. Burns Philp and Co. Ltd. have transferred a large part of their activities from Island to mainland trading, and are thus keeping a large proportion of their funds working. W. R. Carpenter & Co.

Ltd., seeing what was coming, allowed much of their busi ness to go to associated con cerns in other countries, and returned to shareholders about half of the capital that had been subscribed in Aus tralia. For years, probably in the hope that investment conditions in their area will change, Morris Hedstrom Ltd., have kept an amount equal to the whole of their subscribed capital, in cash, stocks, and bonds, which probably does not earn an average of more than 2 per cent., and therefore is an embarrassment to a concern expected to pay at least 10 per cent.

Morris Hedstrom Limited is one of the solidest and best managed concerns south of the equator. But, under the now peculiar economic condi

tions of this tortured world, its success and its wealth have created for it some extraordinary directorial headaches. What IS the answer to too much money, not enough investment opportunities, and not enough staff to take care of the oppor tunities that do exist?

This company, by the way, has a Pensions Fund of nearly a' quarter of a million, which receives each year about £lO,OOO from the company, £6,000 from members, and £9,000 from investments.

It has been built up in 23 years; and, so far, it pays out only £2,500 per annum in pensions.