GAS COMPANY.

Globe, Volume XXIII, Issue 2189, 2 March 1881, Page 3

GAS COMPANY.

The sixteenth annual meeting of the shareholders of the Christchurch Has, Coal and Coke Company was held at 4 p.m. on Tuesday. Mr E. H. Wright, chairman of the Board of Directors, occupied the chair. The secretary, Mr O. W. Bishop, haying read the advertisement convening the meeting, read the report of the directors, as follows : Your directors have much pleasure in submitiug the accounts for the past year, and congratulate you upon the continued prosperity of the company. The large additions to the works which have been in progress during the past two years are now nearly completed, giving you 31 i miles of mains, and a plant capable of manufacturing and distributing about 75,000,000 feet of gas per annum, or more than double the consumption of ISSO, and this it is estimated will meet all the requirements of the district for the next seven or eight years. The No, 4 gasholder, which has been erected daring the year at a cost of £7597, has a capacity of 300,000 feet, and contrasts favourably as to cost with those previously constructed. The increased consumption of gas during 1860 has been much below the proportionate increase of former years, and if you deduct the consumption that is duo entirely to the extension of the mains to Fapanui, Op.twa, and other places, it will be found that there has been no increase whatever within the limits of the mains as they existed prior to May, 1879. Your directors have decided upon lowering the price of gas by allowing a further discount of tenpence per thousand feet. The amount to credit of profit and loss, including the balance from last year, is £8392 0s lid; of which £3360 was paid as an interim dividend, and your directors propose that a sum of £4320 be paid as a further dividend, leaving a balance of £712 0s lid to be carried forward. Your directors recommend the distribution of part of the reserve fund by way of bonns amongst the shareholders, in proportion to the paid np capital. The retiring directors are Messrs Gould, Stevens and Anderson, who offer themselves for re-election.-Edward G. Wright, Chairman. The balance sheet, as at December 31st, 1880, was taken as read. The revenue account showed that after placing £2BBO to the reserve fund, the balance to credit of profit and loss amounted to £7918 Hi 9d. The statement of assets and liabilities was as follows :

Liabilities—To capital, less amount not called up, £48,000; to loan from A.M.P. Society, and interest on ditto to 31st December, £15,225; to deposits at interest and interest accrued thereon, £10,994 14i Id; to bills payable, £1550 11s 7d; to debts due by the company, £283 16s 7d ; to insurance fund, £331 3s 8d ; to reserve fund, £7BOB 16s lOd ; to balance, £4924 10a 2d. Total, £89,118 12s lid.

Assets —By freehold property and buildings, £10,386 5s 7d ; by working plant, mains, meters, Ac., £71,670 16s 3d ; by office furniture, £ll6 10s 7d j by shares in the P.I. and L. Association, £190; by debts due to the company, £3666 4s 4d ; by stock on hand, coals, &c,, £2431 9s 5d j by cash at Bank N.8.W., £440 15s Id ; by cash in hand, £216 11s Bd. Total. £89,118 12s lid. The Chairman said he had very little information to give the shareholders beyond what was in the report laid before them. The very large extension of the mains and works carried out would, he might say, prevent any large expenditure under these heads for several years to come. Taking the increase in consumption at 10J per cent, per annum, they had now enough mains, &0., to supply the consumption for seven or eight years to come, and thus prevent any expenditure upon works for this purpose for many p ears to come. As regarded the extension of the mains of the company to Papanui and suburbs, the directors, it might be, had taken rather a large view of their powers, and had studied the convenience of the consumers there somewhat too much, as experience in working had proved that so far at least the consumption was not so large as might have been expected. However, there was this fact, that the suburbs were rapidly increasing, and no doubt in time the company would reap the reward of their enterprise. As shareholders would see by the report the directors recommended that_ a further reduction should be made in the price of gas. The redaction recommended by the directors would amount to about 4 per cent, on the capital of the company, coming to something like £1750. He trusted that the result of the reduction now proposed would be an increase in consumption, and that in this way the company would be recouped for the reduction now made. Perhaps in view of the probable development of the electric light, it might have been better to have allowed the present price to continue for some time yet, but they had decided to give their customers the benefit nf the reduction. The next item on the report was with reference to the distribution of the reserve fund. This fund had increased very greatly during the past three years. Because they had undertaken some very large works, their expenditure on this account having increased from £40,000 to £70,000, it was therefore thought right to have a large reserve fund until they saw how they stood after these works were carried out. Having called attention to the large amount of the reserve fund, the directors did not wish to ask the shareholders at the present meeting to vote for its distribution, as proposed. What they would like to see would }e, that the question should stand over till the annual meeting of shareholders next year. The report now before them, it was recommended, should be adopted, with the understanding that the directors would not be called upon to distribute this reserve fund until next year. He would now move the adoption of the report and balance-sheet. Mr John Lewis seconded the motion.

Mr Graham laid he wished, before the motion was put, to make a few remarks on the danse of the report haring reference to the reserve fund. On the question of the £7BOB 16s 10d styled the reserve fund he wished to point out that this was not a true reserve fund. He found from an examination of the yearly accounts issued that at the end ef five years, up to 31st December, 1871, there appeared in the accounts two items, one called reserve fund, £732 2s lid; the other depreciation fund, £IOOO. At the end of 1872 these two accounts were placed together and called a reserve and depreciation fund, £2368 19s sd. At the end of December, 1875, this joint account amounted to £5698 9s 9d. At the meeting of the 10th July, 1876, this fund was divided, on the ground that the capital was to be doubled at that meeting, and so that the new shares should not participate. The result of this was that the company had then carried on business for some ten years without providing for depreciation, and the new shares became liable to make the same good. It was impossible to defend this action on iust grounds. Perhaps it might he said let bygones be bygones, but it had been proposed to repeat the process, and it was therefore necessary to point out the injustice of such a proposal. In the first case, to do so would be to leave the depreciation of the plant for some years past unprovided for; next there would be nothing left to meet the emergency of a fire or an explosion, such as had lately occurred in London, and then those persons only who had retained shares liable to calls would have to make good everything, whether the accumulated depreciation of years or the effect of a sudden calamity. . The Chairman said in reply to Mr Graham, he would desire to point out that the actual depreciation was met —that was to say, depreciation on such parts of the works as were subject to some wear and tear. Some part of the plant had been set aside and sold, and the capital account credited therewith. He might refer to some, amounting to £SOO, sold to the Ashburton Gas Company. In 1875 and 1876 £2OOO was written off for depreciation. In the matter of mains, gas holders, &c., it was hard to say what the depreciation would be

bnt it would be very small. He noticed that in Timaru the other day the only sum set aside on this account up (o the present time was £l2O. The directors, he might say, considered that when the reserve fund was distributed, part should remain as a depreciation fund. Mr Hraham wished to know whether it was intended to excise the paragraph in the report with reference to the distribution of the reserve fund.

Mr Stevens said he understood the chairman to move that the report be adopted, with the omission of the clause referring to the reserve fund. The Chairman said this was so.

Mr Stevens said that this being so, as a matter of order he took it that the annual report, minus that clause, was all that was before the meeting, so that comment on that clause was not in order. The Chairman said that be had stated, in moving the adoption of the report, that it was understood that the directors were not to carry out the recommendation as to the distribution of the reserve fund, but that it should bo left over until the next annual meeting. [Hear, hear.J The report and balance-sheet, with the elimination of the paragraph referred to in the former, was then put and carried. Mr J. Gonld moved—“ That the directors be authorised to declare a dividend as recommended in the annual report.” Mr M. Harris seconded the motion, which was carried.

Messrs E. O. J. Stevens, George Gould, and John Anderson wore re-elected as directors on the motion of Mr J, J. Thomson, seconded by Mr A. W. Money. Messrs H. E. Alport and E. S. Harley were re-elected as auditors for the ensuing year. Mr Graham said he desired to move—- “ That the debts of the company be liquidated as speedily as possible by calling up the necessary amount from the uncalled capital of the company, and that any further amount required for work be raised in a similar manner until the uncalled capital is exhausted.” Respecting the calling up of the capital as required for the extension of the works, various pledges to that effect had been given by the directors, apart from the broad fact that at the creation of the new shares they became entitled to participate in tbe company, as money was wanted for works. Tbe shares were those of a manufacturing company, not a Bank of deposit. Who would have anticipated that the new shares would have been made liable for £10,994 14s Id of deposits, or that a total liability of over £28,000 should be contracted in addition to the poor £BOOO which the new shares bad been permitted to pay up ? He found that at the meeting on the 10th July, 1876, when the new shares were created, Mr White, jun., asked the chairman, Mr W. H, Lane, whether in the event of the capital being increased, tbe directors would borrow money as they did before or call up capital. The chairman said the directors were, be believed, unanimous in desiring to use their own capital. This declaration was received with cries of “ hear, hear.” In reply to another question, the chairman stated that the calling up would be regulated by the extensions required. At tbe meeting of the Ist March, 1878, one of the directors endeavored to get a call, which hod at last been made, withdrawn, bnt Ur George Gould stated that he was averse to its going forth to tbe public that the directors as a body were opposed to making a call, and felt that the capital of the shareholders should be used before going outside. Mr John Anderson and other shareholders agreed with Mr Gould, and thought that otherwise the new shares could not participate. At the meeting of 6th September, 1878, it was proposed to borrow a sum of £IO,OOO. Mr iiane objected very strongly, and was joined by several shareholders in his objection to raising money on debentures, and the consideration of tbe subject was deferred to another occasion. At the meeting of the Ist March, 1879, the chairman stated that £20,000 would be required for new works and suggested that they might, with the sanction of the shareholders, raise money on debentures. One of the directors stated that on a previous occasion this had been objected to, tbe holders of new shares desiring to have the capital called up. At the meeting on 21st August, 1879, the announcement was made that it had been arranged to borrow £16,000 for a term of years. At tbe meeting of the 21st August, 1879, the chairman promised that the subject of calling up tbe capital should have the consideration of the directors. At last a call of £1 was made, payable on Ist April, bnt more than that would be required to pay the dividend, and the company would still have over £IO,OOO of deposits and other liabilities apart from the £15,000 mortgage, whieh deposits at least should be paid off by calls. The company was not a Bank of deposit, but a manufacturing concern, in which the shareholders were entitled to have their money employed as the extension of the works admitted.

Mr Joseph Gould said be seconded the motion because ho was one of the unfortunate shareholders who bad taken up the new issue of shares on the understanding that the uncalled capital would be taken to pay for the works. He felt that he had a right to ask that he should participate in the profits of the company. Mr M. Harris said that he also supported the motion, as he bad bought shares on the understanding that the capital would be called up to pay for the works contracted for at the time be bought his shares. Mr White, jun,, also supported tbe resolution.

The Chairman said he desired to explain that so long as the shares were equally held there was no hardship, as by financing tbe dividends were enhanced, but now when shareholders had gone into tbe speculation of buying new shares they were asked to call up more capital. He desired to point out that if they had to pay dividend on £Bo,oooinstead £50,000, tbe dividends would be very much smaller than for years past. The directors were not averse to calling up capital, but they as directors desired to retain some discretion in the matter as to the borrowing of £15,000 that had been approved at an annual meeting held almost immediately afterwards. He might point out that the resolution meant that no further deposits should be takes. It was well known that the company had received deposits at interest varying from 6 to 8 per cent, and that they had received a profit on it which had been divided amongst the shareholders.

Mr Stevens said be wished to point out to Mr Graham that bis motion said tbat_ the debts of the company should be liquidated as speedily as possible. Now the words “ debts of the company ” meant bills payable and other items, which he did not think was quite what Mr Graham meant to include in his motion. Ho thought the resolution should put clearly before them the issue it was intended to raise, and therefore what should be stated was that the deposits should be cleared off by calling up the uncalled capital, and also tbe mortgage for £15,000, to which reference had been made. [Hear, hear.] While speaking on the subject he might just say this, that at the time the directors decided to borrow the £15,000 the money market was in that state that money was not procurable by the general public. Under these circumstances it was felt that it would be very much better to obtain the money required for the extension of their works by borrowing than by making calls. [Hear.] Again he desired to point out that if this resolution were carried, and the deposits and mortgage paid out of the capital called up, it would leave the company with only £6OOO of uncalled capita!. Mr Graham asked whether Mr Stevens wished him to alter his motion so as to vote against it, or would he, if so altered, support it ? Mr Stevens said he merely put the point for Mr Graham’s consideration. That the wording of his resolution with reference to the debts of the company did not put the matter before the meeting as it ought to do, or as he understood Mr Graham to desire. Mr Graham said that they could not get rid of the £15,000 mortgage, as it was spread over a series of years. He contended that calling up £BOOO more beyond the £1 call now made would enable the capital of the company to be profitably used. The Chairman said he would suggest that Mr Graham should alter his resolution so os simply to read that the meeting were of op : nion that the money on deposit be paid off as speedily as possible, by calling up the capital of the company. Mr Graham said that he bad no objection to alter tbe resolution as suggested by the chairman.

The resolution, os amended, was then put, as follows :—“That the money on deposit be paid off as speedily as possible, by calling up the necessary amount from the uncalled capital of the company.”—Carried. A vote of thanks to the directors concluded the business.