MACDUFFS LTD.

Dominion, Volume 32, Issue 145, 15 March 1939, Page 11

MACDUFFS LTD.

First Annual Meeting Of Shareholders SEVERAL STORES TO BE CLOSED Formation Of Property Company The first annual meeting of sliare- • holders of Maeduffs Limited was held in Wellington last week, Mr. Charles Todd presiding over a good attendance. An official report of the proceedings was issued yesterday. tn moving the adoption of the balance-sheet accounts, Mr. Todd said: "As you know a receiver was appointed on November 1, 1938. It was arranged that your present chairman of directors should select a uew board and endeavour to rehabilitate the business rather than have it go into liquidation. This proposal received the unanimous approval of shareholders at a meeting on November 18 last, and also of the creditors at a subsequent meeting held on November 22, 1938. The previous board other than Messrs. J. 8. Land and W. J. Candy resigned, and the new board operated as from November 19. 1938. "Since that date a circular letter has been dispatched to shareholders explaining developments and a further meeting of creditors has also been hold. The proposals of your directors have been endorsed and the bankers have also approved of our actions. The directors received an offer for our freehold premises and for our stock from a rival organization, but the acceptance of this offer would have left practically nothing for our preference shareholders apart from a total loss to the ordinary shareholders. The directors, in view of the outlook and the advent of the new import regulations, did not hesitate to turn down this offer, this action being endorsed by the second meeting of creditors on December 21. Closing Some Stores. ‘Tlie returns for November and December, 1935, when the company earned a net profit of approximately £9OOO after providing for depreciation, were very satisfactory, but it was quickly apparent to the directors that certain of our stores should be closed down. To thio end your representatives have been giving close and careful attention to the possible earning capacity of each branch. The second store in Christchurch was closed on February 25 and the Manners Street store in Wellington will be closed by the end of March. One difficulty is that the company is* liable for heavy rentals for a period of years in each case and the subletting of such premises at a minimum loss has given the board no little concern. However, negotiations are proceeding and we are hopeful of concluding arrangements which will be fair and reasonable.

"'l'he figures disclosed in the balancesheet speak for themselves. At the meeting of shareholders in November it was announced that up to the end of October, 1938, the estimated loss was £28,651; this figure, as explained, did not provide for depreciation or for certain contingent liabilities and was based on the-estimated stock valuation. We are pleased to report that our secretary’s estimate of the value of the stock was approximately correct, and after making proper allowances for depreciation amounting to £6773 and providing for liabilities not previously taken into consideration,_ reserves and stock adjustments, totalling- £8960, and deducting the net profit earned in Novem-ber-December, the debit in the appropriation account as at December 31, 1938, is £34,384. The directors have deemed it wise fully to face up to the position and to indicate to shareholders just what the position is. Reduction of Stocks. “Under the circumstances the inventory value of the stock at £149.995 may be regarded as very satisfactory. At the inception of the company the book value of the stocks of the two companies, Shillings Ltd. and Maeduffs Ltd., was £282,672, and in the reduction of this figure the stock problems have been very difficult. It will be pleasing for shareholders to know' that a large proportion of existing stock has been purchased at prices lower than replacement cost. The policy of the company will be to still further reduce stocks in harmony with requirements. Such reductions automatically improve the banking position. “At October 31, 1938, the company’s liability to its bankers was £158,126. During December this figure was reduced by £25.000, and the receiver had at the credit of his account at December 31. £41.746. After taking into account accrued interest the total reduction in the company’s liability to its bankers was £65.671. exclusive of the receiver’s current liability in respect to trade creditors. This reduction in the short period of two months at no material sacrifice of profit to the company can be considered an achievement and endorses' your present board’s decision to carry on the business.

“While the receiver is still in legal possession of the business you? directors are actively controlling affairs with the receiver’s co-operation. Until -satisfactory finance is arranged this must necessarily remain the position. A Property Company. "Tile directors are still of the opinion that the only satisfactory way in which to meet the financial obligations of the company is to form a property company to acquire the freehold and leasehold interests in Cuba Street, Wellington. Palmerston North and Lower Hutt. From tliis source something like £90.000 should be secured, which would practically clear up the overdraft. With fresh arrangements with our bankers on the basis of accommodation in respect to our stocks and other assets we should then have sufficient working capital and be in a position gradually to liquidate our indebtedness to our deferred creditors. Negotiations are in train in regard to the property company and definite proposalswill, we hope, be shortly placed before you. For the protection of both creditors and shareholders Hie basis of taking over the property will he supported by valuations of at least two leading independent valuers. Much remains to bo done to place Maeduffs, Ltd., on a satisfactory basis, and if nothing unforseen happens your directors hope gradually to overcome all difficulties and ultimately place the company on a profit-earning basis.” Reduced Indebtedness. Mr. T. N. Gibbs seconded the motion and commented on the changes iu the balance-sheet items during the year. The directors, said Mr. Gibbs, were well satisfied with tlie stock position. Tile reduction in the company’s indebtedness to its hankers from November 1 to December 31 could be considered an achievement. A further substantial reduction had been effected during January and February. The deferred creditors, representing the amount of £60.367 owing at October 31. could be divided into approximately £47,000. covering stock purchases, and £13.307 for other liabilities. At that period of the year stock was building up to meet the Christmas trade, and therefore the amount of £47,000 represented little more than ordinary credit allowances. The item for receiver’s trade creditors covered current stock purchases, as well as rates accrued, salaries and wages. Land tax had been assessed to the company at £2203, and an approach had been made to

the Commissioner of Taxes regarding the company’s inability to pay the tax on leasehold properties. As regards the formation of the property company, a few shareholders hat expressed the view that it should, if possible, be avoided. The directors din not wish to sever the properties from the present company, but the main consideration was what course would build up the strongest financial position. The shareholders would have the opportunity to take up the property shares in preference to outsiders, but a limited period for this preference would be necessary. Mr. W. A. Veitch said be considered that the figures presented were a plain, honest statement, and is such, were very commendable. The motion for the adoption of the accounts was carried. The retiring directors, Mr. J. S. Land aud Mr. IV. J. Candy, were re-elected to tlra haul’d-