GAS COMPANY.

Globe, Volume XXIII, Issue 2308, 27 August 1881, Page 3

GAS COMPANY.

The adjourned meeting of the shareholders of the Christchurch Gas Company was held at 230 p.m. yesterday. Mr John Anderson occupied the chair, and there was a full attendance of shareholders.

The Chairman said that, in justice to their secretary, he desired to correct an impression which might be caused by reading the report of the proceedings on the former day, that the s oretary had not done his duty in not having published the notices of motion of Mr Graham in the advertisement. It was not right that the secretary should have the blame cast upon him, as if any blame were to be imputed, it was to the directors, under whose directions Mr Bishop had acted. He had only thought his duty to exonerate Mr Bishop, their secretary, from any imputation of not having done his duty, which might have been caused by the statements made at the meeting held the day before. Having done this, he had now to inform the shareholders that after the meeting the directors had considered the financial position of the company, and had decided to make a call of 10s per share on the uncalled capital of the company. This would leave the directors in a very comfortable position as regarded the meeting of their liabilities when necessary. The position of the company would be, at the end of October, as follows, including the payment of the dividend now authorised :—Receipts, £8999 6s Id ; payments, £8996 6s 6d. The company had been extending their operations very much during the past two years, but these were now completed, and of course the expenditure for labor and material would now cease. The call of 10s per share on the uncalled capital would place the directors in a position to meet all their liabilities, and pay dividends out of their own resources without borrowing from anyone. This being so the shareholders would not require the directors to call up more money than they required to use, because if they did so they would have money lying idle. —Mr Graham desired to ask whether the statement just made was to the beginning or end of October.—Mr Cowlishaw pointed out that the receip's came in early in October.—Mr Graham wished to ask whether the gas receipts for September meant that which was collected for August. The statement now read by the chairman really meant up to the 31st October. —Mr Bishop explained that of course the estimated receipts from gas for September meant that the amount would be collected in August. The resolution proposed by Mr Thomson, as follows :—“ That the directors be authorised to pay an interim dividend of 7 per cent, for the half year, payable on the Ist October," was then put and seconded by Mr W. H. Lane.—jMr Graham then said : It is clear that asy shareholder can speak upon the question of a dividend and its bear ing upon the general position of the company. With respect to the notices which I gave, they were lodged on the 15th in ample time according to clause 27 of the articles of association, and it is clearly wrong to urge that I should have advertised them. It was the duty of the directors if they thought advertising was required. The notices therefore hold good. Now, as to finance. It is only by holding three months’ dividends in hand that the company does not stand more indebted when it pays a dividend. The call can be used. As for funds which may accumulate before the next dividend, the dividend itself should be paid more promptly. The Melbourne Company holds its yearly mooting on the 28th January, and pays its dividend on the 2nd February. For any surplus there is good use in building up a true reserve fund instead that fund in the works to the exclusion of the capital. It should be remembered that it is now over five years since this uncalled capital was created. By its very creation holders of the shares became entitled to participate in the company as their money could be employed in the works, and not only was this the case from ordinary right and equity, but various pledges were given by the directors that the money would bo so called. The whole of the £40,000 has been expended, being £lO per share, yet only £4 per share has boen called. At the last meeting I referred to the history of this question and of the reserve fund. I can supply anyone who may not remember with the details. I will now merely say that, instead of the capital being called, £15,000 were borrowed on mortgage at 9 per cent., money was received on deposit like a Bank, and the reserve and depreciation fund was employed in the works. Now, for this reason the fund exists only on paper as a debit in the accounts. In any case it is evident that it is not available as a true reserve, which could be used on emergency. Formerly the company held money invested against the reserve fund for esrs, and this sound practice should bo resumed. I will support that course, but for the present I refer to the question to show that if the company accumulates something towards the end of the year, it would bo more fitting than to pay dividends out of borrowed funds. Until recently the company had, at every balance, three or four thousand pounds on hand and available, exclusive of about £2OOO which accumulates before the tardy payment of the dividend. The Melbourne Company, at its last yearly mooting, hold about £50,000 available, while its reserve was £20,000. I repeat, that our reserve and depreciation fund should bo invested in realisable securities, so that it would be a real reserve in time of trial

or calamity, and not appear merely on paper, while it is really sunk in the works, to the exclusion of the shareholders' capital, which capital was distinctly raised for the extended works referred to, —Mr J. E. Hill said that the practice which had obtained of declaring a dividend without supplying the shareholders with any information was a bad one. He said that for a gentleman to get up in the room and move a resolution that a dividend should be declared without a single figure being given to the shareholders was a mistake. He thought the chairman of the directors should get up at the meeting, and if no semi-annual statement was prepared state what amount was then at profit aod loss, thus telling the shareholders what amount should bo paid. Again, he could not see why three months’ delay should take place in the payment of the dividend. There were large companies and banks doing a very much larger amount of business than the Gas Company whose accounts were closed and dividends paid in one month. He knew that this was the case with gas companies in Australia. Again, he was of opinion that they should have half-yearly statements of accounts, the same as other gas companies.— Mr E. D. Thomas wished to know if the reserve fund only existed on paper in the books. If this was so, as stated by Mr Graham, and no doubt this was the fact, then when an explosion occurred, which might bo at any time, the new shareholders would have to pay the expenses of reinstatement. He thought it was not fair to the holders of new shares that all the cost of reinstating the works should be defrayed by them without participation by the old shareholders. —Mr Oowlishaw wish ed it to be understood that the alteration of the policy of the company by having their reserve fund only in their works was done at the instigation of the shareholders. But whilst this was so he felt that there was a great deal of force in what Mr Graham had said as regarded the advisableness of having a true reserve fund. The change was made when money was dear, and when it was was thought that it would inconvenience shareholders to make calls on them. Ever since the meeting in March the directors had been endeavoring to give effect to the resolutions of the shareholders with respect to making a call. They had now made two calls, always endeavoring whilst doing so to bring the calls at the time when a dividend was declared. This course they had carried out, and he might say that the imputation that the directors were opposed to making a call was undeserved. As far as regarded himself he might say that he was one of those whom, if driven, would very likely bo all the more inclined to go the other way. The calling up of more capital than was required would at this time, when money was cheap and no means of investment, be no good at all. The money would simply remain in the coffers of the company without any chance of investment, so that he could not see why the company should call up more money than they required. As regarded the supply of half-yearly accounts, he did not see why they should not not be supplied if the shareholders agreed upon it. He felt that Mr Graham’s proposition as to the payment of dividends might be carried out without much trouble if the shareholders desired it. —Mr Graham made some remarks as to the borrowing of the money, and the estimated receipts, which he put down at about £IOOO per month net. As regarded the matter of the calls he might say that he did not think there was one shareholder who would not willingly pay up the call. He contended that his notices of motion were strictly in order, and he now asked the chairman to rule if they could be put.—The Chairman said that the matters mentioned by Mr Graham would be considered by the directors, which he thought ought to content him.—Mr Graham, after the expression »' opinion from the chairman, would be quite content to leave the matter in the handsjof the directors. The Chairman said that there were many of the suggestions made by the shareholders at that meeting which were exceedingly valuable, and would receive the fullest consideration at the hands of the directors. The motion for declaring the dividend was then put and carried, and the meeting terminated with a vote of thanks to the chairman.