to the stockholders of " the utah construction company san francisco california january 7 1952 the fiscal year ending october 31 1951 was a period of continued progress for the utah construction company your company and its wholly owned canadian subsidiary the argonaut co ltd earned a consolidated net profit of 2,947,061 or 16.79 per share this is the highest annual earnings in the history of the company and compares with 2,364,385 or 13.47 per share during the preceding year the improvement in net profits was attributable to the greater earnings provided by the mining activities of the company earnings from construction were above the levels realized in 1947 1948 and 1949 but below the earnings of the preceding year stimulated by a high level of general business and given added impetus by the national defense program the volume of heavy construction remained at an ex tremely high level however the wave of inflation following the outbreak of hostilities in korea again caused the cost of labor and materials to rise sharply adversely affecting earnings on construction work performed during the current year but contracted for in earlier periods your management had recognized at the end of world war ii that inflation would be the inevitable result of the fiscal and monetary policies being pursued by the federal government to offset the detrimental effects of inflation upon our general contracting business the company adopted a policy of devoting a part of its resources to the acquisition of basic raw materials the ownership of which would serve as source of profit as well as a hedge against inflation to this end we acquired in 1946 iron ore deposits near cedar city utah in 1948 we acquired coal deposits near ozark arkansas this year through our wholly owned subsidiary the argonaut co ltd we opened up an iron ore deposit on vancouver island canada the wisdom of this policy was abundantly proved by the results of the past year the de mands for iron ore and for coal were greatly stimulated by the defense program prices and profits margins increased in response to inflationary pressures mining profits were granted special tax treatment both in the united states and canada in order to encourage production of a wasting asset in the face of extremely high income and excess profits taxes these factors caused our mining profits to increase 208 percent over the preceding year and permitted the company to increase its net profits by 582,676 this increase could not have been duplicated in our construction activities because the excess profits tax would have taxed away virtually all earnings above the present level in this end of our business