Breweries' Year

Hawke's Bay Herald-Tribune, Issue 143, 5 July 1937, Page 11

Breweries' Year

MARKET EXPANSI0N Dominion Company's Record Turnover M0DERN PLANT USED Continued expansion, a record turnover and a progressive policy in providing for future developments wero stressed at the annual meeting of Dominion Breweries, Limited, held in Auckland last wcek. The chairman of directors, Mr L. J. Stevens, who presided, said: — Saies have again increased at a steady rate, and the ratio of increase in the past year has set a new record. This progress is most gratifying and proves that the policy measures adopted by your directors at the inception of the company — not without certain unhelpful criticism — was the sound and 1 right policy upon which the organisation of the company could be founded and extended. Under these favourable circumstances it is again my pleasure to remind shareholders that the suceoss of the company is substantially due to the courage, enterprise, ability and optimism sof our managing director, Mr H. J. Kellilier. Ilis ability and enterprise is now recognised far beyond the confines of Dominion Breweries, Limited. Shareholders will know that Dominion Breweries, Limited, is to-day recognised as one of the major industrial enterprises operating in New Zealand. Its trade extends throughout the country and even beyond to the islands of the Pacific, and the ships trading from ovcrseas into the port of Auckland. The growth of trade and extension of the company's activities have been followed by appropriate capital provisions At balance date the company found remunerativG outlets for a capital sum of £188,427, or, with sums then creditcd to reserves account, a total shareholders' funds amounting to £215,662. In every department of the company's activities the past year has been a most nofable one. New Brew House. A large amount of up-to-date plant has been installed in the brewery particularly adapted for handling the company's large trade in bottle beer, and efficiencies have been improved in a marked degree. 4 The full scheme of reconstruction a,nd extension is still in progress. At the moment the major work is the erection of a new brew house fronting. the Great South Road. This building, when completed, will have a height of ovor 80ft., and will _become a landmark foj many miles around. In this buiiding will be housed a new brewing plant, .now on order for the company, and designed to enable the company to produce the highest grade of lager of the type popular in Continental countries. It is your directors' opinion that a wonderful market exists in New Zealand for this type of beverage, and it is surprising that, at the present time, no provision has been made to meet the requiremcnts of tho market. Further Trade Outlets. During the year further guaranteed trade outlets have been secured by the company by the purchase of freehold premises and thp leasing of hotels. By these measures the company's trade has been further consolidated. I think I mav now state that the company's trading position is definitely assured, and the stage set for further progressive development of the company. Purcbaslng Power. The wliole Dominion has recently enjoyed the beneiit of increased purchasing power, which has served to give the required tonic effect to business, with tlie result that large capital resources lying dormant during the years of the so-called depressinn are now being brought into circulation. Private, Governmental, and local body expenditure is increasing, and progress is certain to be maintained over a considerable period. I think I may claim that this company has secured a satisfactory share of the total business available during the year. Licensing Laws. From time to time sugge?tions more or Iobs in tho nature of propaganda are made on the necessitv for revision of our licensing laws. I undorstand that some revision is under considcration by our Government. In many ways our licensing laws are out of datc. and in no way suited to the conditions or necessities of our present population. I would welcome legislative enactments that would give greater security to tho trade and enable much-needed improvements to be made in the matter of accommodation for the travelling public. This necessity could be met by provision for the granting of new licenees in cities, such as Auckland, to br'lding owners prepared to furnish tlie 110cessary accommodation. Rcdistribution of licencea- is advocated by many interested parties, but this, in my opinion, is not a solution. The removal of existing licences to contres of population will, in my opinion, only help to perpetuate the monopolistic system at present existing, and turn into profitable investments more or less wortbless assets. New Licences Wanted. My opinion is that legislation should permit the granting of absolutely new licences. If the Government is not Drepared to give this right, then I cnnsider the Government should resumo surplus licences at present valuations, and grant licences in new locations. To provide for reasonable competition, new licenees should not be granted to any organisatioa c-onnected with the servicing or control of houses in the immediate vicinity of the location seleeted for the grant of new licences. Any amendment of the licensing law should repeal the invidious distinction which re^uires liotification of saies o£

liquor consigned to residents in nolicease areas, even where such nolicense areas are immediately adjacent to licensed areas. Likewise, reasonable provision should be made enabfng entertainment of gnests in licensed p'remises more in keeping with the enlightened views of the present day. Heavjr Taxation. - Before considering in detail the matter of the year's accounts, 1 would lik« to draw attention to the large provision required for payment of land und income tax. The sum required, £24,000, is a very heavy impost. This sum is in addition to over £83,000 paid by the company during tho year for beer duty, Customs duty and saies tax. I reoognise that a certain amount of taxation is necessary to meet tbe requirements of the social policy of tho Government. This policy has my eordial endorsement. At the same time, I think that the welfare of the countiy requires that as large a sum as prssible should be left available to industrial enterprises for future development of their industry. This policy will be to the ultimate advantage o'f the Government and the country. High taxation may bring in immediate rcrevenue re quirements', but a far-sighted policy will show that tax reductions are often more efficacious from a revenue standpoint. The State has much more to gain by tho developpient of industry than from a policy restrictive of opportunity of expansion. I would eommend our Minister of Finance to give this thought his careful consideration when frammg the next Budget. The Yeai's Accounts. The accounts for the year balance at £292,636, compared with the previous year's total of £151,706. The purchase of freehold hotels is reflected in an increase in the net hook value of land and buildings from £16,177 to £66,833. Similarly, the value of plant, maeliinery, furniture and littings has increased from £47,486 to £89,149. This increase is due to the purchase of large items of plant for the brewery and to further investments in furniture for freehold and leasehold hotels under the company 's management. Stocks at £45,902 show an increase of £12,800, an indication of larger business, while snndry debtors, for similar reasons, show an increase of £12,000. The value of hotel leases, investments, etc., is £7140 higher than the previous year. Cash at £28,141 is £16,275 higher. All these figures speak of progress and development. On the liabilities side, paid capital shows an increase of appro^imately £80,000, and a new and attractive item appears for the iirst time in the shape of general reserve account with a credit of £27,235. Sundry crcditors show an increase of £15,900. Income tax reserve stands at £24,000, and appropriation account is £18,635. At barance date capital unpaid totalled £11,229. In tlie prolit and loss account gross prolit shows an increase of over £35,U00. After providingj the eubstantial sum of £83ll for depreciation and the large figure of £24,000 for income tax and land tax, the net profit is £22,038. an increase for the year of £6815. With the balance brought forward from the previous. year's accounts a total o£ £23,260 is available for appropriation. Dividend 9 per cent. • The interim dividend paid in Deceiriber last amounted to £4625. The directors now recommend. shareholders to declare a dividend at the rate of 9 per cent. per annum calCulated on the amount paid up on all shares from time to time, from which amount will be deducted the interim dividend paid. They further recommend the transfer of £10,000 to the general reserve fund, and to carry forward into next year'e accounts the sum of £962 18/7. 1 may say that, upart from the large reserve for income and land tax, the company had during the past year to meet a certain amount of tax in excess of the provision made in last year's accounts. increasing saies. In seconding the motion for the adoption of the report and balancesheet, the managing-director, Mr H. J. Kelliher, said: — "As far as the balance-sheet itself is concerned, the actual results achieved speak for tkeniselves, and require very little elaboration from me. During the 12 montlis under review the company has further consolidated its position and has laid a sound foundation for the future. "What is more, the com.pany' s products continue steadily to rise in public favour, so much so that the first tliree months of the new iinancial year show an increase of well over 30 per cent., when compared with the corresponding period of last year. A Model Brewery. "The rapidly-increasmg demand for Waitemata products necessitated sub--tantial additions and alterations to the existing buildings, plant, und machin«ry, and in making these additions and alterations the opportunity was taken to install the latest and most up-to-date equipment, with the result that to-day the Waitemata brewery is recognised as the model brdwery of New Zealand. "However, we were not content with just brewing the best possible beer and maintaining a uniform quality when liottled ; our further aim was to ensnre that our draught Waitemata and Dominion bitter would be served to our customers in the same high quality aa they leave the brewery. "This has entailed a gjreat deal of rescarch and experimental work, and I am pleased to say that we have now: succeeded in devising a scientific sys~ tera for the 6toring and serving of draught "beer which, without doubt, is the most hygienic and perfect system ever applied in the trade. '[This system has already been install at the Hotel St. George, Wellington, the Central and Prince Arthur Hotels, Auckland, the Criterion Hotel, New Plymouth, and the Waikato Hotel, Hamilton, while the rest of our hotels will be equipped in due course. It is generally known that beer is subject to tho same bacteriological influences as milk and one of tho inain points of this new system is the fact that at no time, from the moment the beer is brewed to the moment it reaches the consumer's glass, does it come in contact with the atmosphere. "This system, which it the company's own patent, embraces a 270g/Ulon storage cylinder — made of Firth's AU-British Staybrite sfceel, a,nd ,

1 is guaranteed to be more hygienic even than glass. It is constructed so as to enable the temperature to be regulated and controlled and, above all, to serve cold beer during the summer months. It is a costly system to install, each individual installation costing approximately £1000; but the results more than justify the expense, as it does away completely with the old and unsatisfactory method of drawing beer through unhygienic pipes, and already the public have shown therr appreciation to a marked degree. A Profitable lnvestment. "A few words regarding Dominion Breweries shares as an investment would, perhaps, not be out of plaee. I am sure shareholders will be interested to learn that the return on the original investment, by way of appreciation and dividends, amounts to no less than 33 1-5 per cent. per annum. ' 1 If we take the ease of a shareholder who invested £100 at the inception oi" the company, and who, since that time, took up his full quota of shares aa ofi'ered at subsequent issues, sueti an investor would now hold a total of 250 shares, for.. which I10 would have paid £275. If the shareholder sold these shares at to-day 's market prace and added all divHends received, his total realisation would ainount to £572 2/6, leaviug him with a net profit of £297 2/6. The average capital invested by sueh a shareholder since the formation of the company would be £.125, and tho average .profit over an effective period of six years and 10 months would be 33 1-3 per cent per annum at simpie •interest. "It will thus be seen that, notwithstanding the very difficult tiines we have come through, Dominion Breweries have proved a highly profitable investment and I think we have every reason to look with confidence to the futuie for a sustained earning capacity of the capital invested in our enterprise. ' ' In conclusion, ladiee and gentlemeu, I would like to express my appreciation of the valuable work and wholehearted co-operation rendered by the members of the stafE of Dominion Breweries. In this I include the staff at our offices, stores and brewery, as well as managers and staffs of our numerous hotels. The ]?ast year's results are in no small measure due to their loyal1 service and I feel isure you will all gladly endorso my remarks of appreciation. Special credit is due to our head brewer, Mr Morton Coutts, and his band of workers in npholding the high standard of quality set by Waitemata products. "I have much pleasure in seconding the report and balance-sheet." The directors' report and annual accounts were unanimously adopted. Tho retiring directors, Messrs W. J. Coutts and H. Eeimers, were re-elected unopposed and the auditors reappointed. A vote of thanks to the directors, proposed by a shareholder, was earried by acclamation