RECORD YEAR

Wairarapa Times-Age, 8 July 1939, Page 5

RECORD YEAR

DOMINION BREWERIES INCREASED DIVIDEND STRONG FINANCIAL POSITION. BONUS VOTED TO STAFF. “Trade is still increasing and to a certain extent the facilities of the company are still taxed to meet demands." This was the statement made at the annual meeting of shareholders of Dominion Breweries. Ltd., by the chairman of directors, Mr L. J. Stevens, in submitting what he described as the most significant annual report thus far rendered. “Outstanding features in this report,” continued Mr Stevens, "are the increase in dividend rate to the satisfactory figure of 12 per cent per annum: the increase in the company’s reserve fund to £100,003: and the elimination from the accounts of the company of the item of goodwill' hitherto standing in the balance-sheet at the sum cf £19.100.

“These features give evidence of the expansion afid consolidation of the company’s position forecast at previous meetings of the company. On this occasion the -accounts of the company balance at the large figure of £622.113 or an increase bver last year’s figures of £141,346. On-the assets side of the balance sheet, land and buildings at cost, less depreciation arid less mor:gages, now stand at the het sum cf £248,635. This amount shows an ih Crease over the previous yeaf of nearly £50,000, while liabilities in the rr lure of fixed mortgages, have increas ed by less than £20,000. “In other words, bvei - £30,000 of the company’s share capital has been invested during the year in freehold securities-. Plant, machinery, furniture and fittings, at £194,084, shows a substantial increase df nearly £60.000. duih a Idrge measure to the purchase cf brewery plant and machinery and further purchases of hotel furniture and equipment, stocks; at £84,149. are approximately £27,000 higher than las’ year, while bobk debts have increased by over £13,000. Both the stock and book debts figures reflect the larger volume of the company’s business. WRITING DOWN OF LEASES. “Vaide of hotel leases, investments and advance payments on the other hand are nearly £5OOO less than last year. The 'decrease is due, principally, to a judicious Writing down of the value of leases.

“On the liabilities side of the balance sheet, ah altefhtioh of note is the increase in the subscribed capital of the company to the sum of £300,000 — an ihcrdaSe bf £50,000 ih the capital of thS_Cofnpahy its at this lime last year. “Of thb total sum shown bit the liabilities side of. the balance-sheet shareholders’ funds, i.e., capital, reserve fund and appropriation account amount to £442,841, of over 70 per cent. This, I claim, is the best possible evidence of the consolidation of the company’s position, and a good indication of the -fiifeflt bf the company’s shares as an investment. “The profit and loss account shows the gross profit earned amounted to £252,408, ah increase for the year of approximately £104,000. I would especially draw your attention to this figure. In view of the increase in the company’s capital; some addition would, of cotifse, be expected ih the gross profit, biit I say that, without a product Which meets ahd satisfies public demands, and a sales polity that is Vigorous ahd persistent, this increase in gross profit would not have been realised.

EFFICIENT MANAGEMENT; “And, with the increase in gross profit, efficiency and good management have secured to the company a most satisfactory itealisation of net profit. At the sum of £65,477, the profit results for the year show an increase of over 50 per cent oh the results secured in the. previous year. “It may interest shareholders to kfibw that het profit has fisfen substantially in ratio to the increase in the company’s sales. Actually, out of the total increase ih the gross profit, additional expenses total 50 ber cent, while additional tax provision and increase in net profit share the balance approximately equally. Every shareholder must appreciate this magnificent result, which, if not a record, certainly compares more than favourably with the Results achieved by any other company trading on similar lines to this company. CHAIN OF HOTELS. “Every department of the company contributed handsomely to the results achieved. In particular I would refer to the company’s chain of hotels which by the provision of superior accommodation and refreshment, have secured to the company a very substantial trade and profit. The company is now satisfactorily placed in respect of guaranteed outlets, and the steps ih respect taken by, your directors to assure the company’s future as a major industrial enterprise enable me to forecast a contiriuance of the results achieved during the past year. “Trade is still increasing and, to a certain extent, the facilities of the company are still taxed to meet demands. I can assure you, however, that your directors adopt a conservative policy and decisions only follow the closes inquiry and scrutiny by technical and business advisers of the company.

“GOODWILL” ACCOUNT WRITTEN OFF. ' “The recommendation of your directors to apply part of the year’s profl' to writing off goodwill appearing a an asset removes from the balance sheet the only item of an intangible na lure. “Hitherto your directors have followed a policy of showing the amount of profits and share premiums applied by the company to reserves. With the reserve fund now increased to the large sum of £lOO,OOO, or 33 per com of the company’s capital, your directors feel they may depart from this policy and apply £19,100 of the past year’s profits in writing off the goodwill. You will appreciate that this is equivalent to carrying an additional £19,100 to reserves, which makes the directors' proposals as to appropriation of profits equal to one half of shareholders and one half back into the business. I am sure shareholders will approve of this recommendation. “Once again I would pay tribute to the skill and energy of the managing director, Mr Kelliher; at all times he is ‘a tower of strength’ to the company. To the executive officers and staff of the company, and to the brewery and store employees I extend the appreciation of the board of directors for their loyal services rendered during the year. This appreciation takes tangible

form in a bonus to be granted to employees, for which provision has already been made in the statement of “And now I move the adoption of the report and balance-sheet. This motion carries with it the payment of the dividend for the year at the rate of 12 per cent per annum, less interim dividend already paid." GREAT EARNING CAPACITY FACTORS IN SUCCESS. In seconding the motion, the managing director, Mr H. J- Kelliher, sai he felt sure the report and oalancesheet would be received with the u - most satisfaction by shareholdeis. “Indeed,” he continued, “we have every reason to feel gratified witn t strong financial and trading position the company is in today, as well as with its remarkable scope for further expansion. During the past year every sphere of the company’s activities has been greatly strengthened and conso idated and, what is even more important, the excellent results as disclosed in the present balance-sheet have nm only been maintained but are being substantially exceeded since the close of the financial year. “The remarkable earning capacity or the company may be gauged by the fact that the net earnings for the financial year under review —after providing for all contingencies—are sufficient to cover the dividend of 12 per cent nearly twice over. As far as the prospects for future development and expansion are concerned, I indicated at the last annual meeting of shareholders that for the first three months of the new financial year—that is, April, May and June, 1938—every department was showing a substantial increase over the previous year. This increase is still continuing and our ■utput for the first three months of the current financial year —that is, April, May and June, 1939—is again 30 per cent higher than it was for the corresponding period last year. To put it in another way, although our total sales for 1938-39 showed an increase of close oh a million gallons, this extraordinary increase is still being maintained. " It is significant that this continued expansibh of cur output has partly taken place during a period when the total consumption of beer for New Zealand actually showed a decline. During the four inonths ended March 31, 1939, for instance, the nationdl revenue ffbm beef duty declined by approximately £lOOO, when compared with the corresponding period the previous year, ’while, as already stated, oui- own sales showed a substantial increase. This may be taken as striking evidence of the popularity enjoyed by Waitehiata products.

Share of total trade. “Another aspect with a direct bearing on further expansion is the voltime of out- total national production. The total production of beer ih New Zealand for the year ended March 31, 1938, was ih the vicinity'of 18.000,000 gallons. Since its inception, our company has tremendously increased its quota of this total trade from year to year, and it logically follows that we need only maintain our present rate of progress in otdet to secure in the predictable future a commanding share of the total beer trade of the Dominion. As. a matter of fact, last year our brewery, produced in addition to draught beer, Over 13,000,000 bottles of beer, which constitutes a record output for bottled beef for any brewery in this country. ' “Contrary to general belief. New Zealand is iteally not a heavy beerdrinking country when comparing our total national production with that of other countries. On a population basis, production in New Zealand for 1938 amounted to 11 gallons per head of population. According to the latest figures available, the production of beer per head of population is 13.9 gallons ih Great Britain, 20.2 in the Irish Free State, 13.5 in Denmark, 36.5 in Belgium and 13.9 in Germany. In a comparative sense and regarded from a national viewpoint, there also appears to be scope for further expansion in this direction. OUTLOOK FOR FUTURE. “Although I am optimistic regarding the future and certainly do not anticipate anything ih the natufe of a serious setback, we cannot entirely disregard the war hysteria that exists throughout the world today, and no one can foresee as to what extent it may ultimately undermine productive industries. At the same time, I feel confident that the financial and trading position of our company is such that its stability would remain unimpaired even should we have to face a major crisis. The main factors, upon which I base this, statement are:— “The remarkable earning capacity of the company and the guaranteed outlet for the bulk of its production through the company’s own hotels. “We now possess a brewery combining the most advanced features of modern brewery equipment and design, a fact that is mainly responsible for the high quality and extraordinary popularity of our products. “The liquidity of the company’s stock and trading assets. “The strength Of our general reserve, which now represents one-third of the total capital. The company’s assets; which cover more than four times our liquid liabilities by way of bank overdraft, sundry creditors and contingent liabilities such as provision for income tax and the payment of a bonus to employees. DIVIDEND AND WAGE BONUS. “After giving careful consideration to all circumstances, your directors felt justified in recommending a dividehd of 12 per cent for the financial year ended March 31, 1939, and a prof-it-sharing bonus of 71 per cent for all members of the staff at the brewery, stores and head office. “In view of the fact that the continuance of the brewing industry in New Zealand is subject to the country’s approval every three years, brewery shares cannot be regarded as gilt-edged security, and capital invested is, in my opinion, entitled to a somewhat higher return than when invested in ordinary industries. As a matter of fact, I am being constantly reminded that much higher dividends are being paid by Australian and British browing concerns. Dividends paid by leading Australian breweries have averaged over 12 per cent during recent years, and these rates were undoubtedly a factor in attracting investment capital to the Commonwealth prior to the exchange control. UP-TO-DATE EQUIPMENT. "As an indication of the vital importance of modern methods and equipment, shareholders may be interested to learn that the original brewery and plant, as taken over only 8 or 9 years ago, are now completely obsolete and have been written off the company’s

I books. It is only by adopting progressive and scientific methods of brew'ing. and installing up-to-date plant and equipment, that we are able to produce and maintain that uniformity of quality which is in a great measure responsibile for the popularity of Waitemata products. “The progress and development of our company during the past year furnishes ample proof of the excellent co-operation received from all members of our organisation, and I wish to take this opportunity of expressing my personal appreciation for the readiness and willingness with which they have worked in the interests of the company. Without this co-operation and this active interest, it would have been most difficult to cope with the demand during the peak periods of the year. We can congratulate ourselves oh possessing a band of loyal workers, who look to our organisation for their future and therefore are anxious to further the progress of the company. I feel sure shareholders will wholeheartedly endorse your directors’ recommen- ■ daticn to pay a profit-sharing bonus of 71 per cent to all employees of the Waitemata Brewery, stores and head office, and so enable them to participate in the results of a successful year. STATE TAKES £250,000. “In conclusion I might say that, as far as it is practicably possible, today we have a trading concern with embraces a complete cycle of successful production, distribution and consumption. The total gross profit for the year amounted to over £252,000. Of ‘his sum, on a rough calculation, the brewery and head office employees received. by way of wages, salaries and henus, over £55.000. or 22J per cent; the shareholders about £32,000, or 12| per cent; general expenses and depreciation, £74,000, or 29 per cent; the Government by way of income tax will benefit by £60,000, or 23| per cent; the balance of approximately £32,000, or 121- per cent, being placed to reserve.

“It will thus be seen that the benefits of the company’s operations,.were widely and fairly distributed. Shareholders and employees received a satisfactory remuneration for their capital and laboui*. Producers of raw material found a substantial market for their products, the amount spent on malt, hops and sugar alone being £52,000; while consumers benefited by the outstanding quality of Waitemata products. and the installation of the mOst hygehic beer-serving, system used anywhere in the world. As a result of our continued policy of renovating ahd reconstructing our hotel, the travelling public are being provided with a higher standard of hotel comfort ahd service. Finally, when allowing for excise duly and general taxation, etc., the national exchequer was the greatest beneficiary 'of all, the company paying by way of direct and indirect taxation over £250,000 during the past financial year. “It is not iffy intention to make any prediction regarding the future, except to say that I am not ohe of those who look upon a general war as an event inevitable. On the contrary, I am sufficiently hopeful that common humanity and common sense will prevail, and that sooner or later a better international understanding will result in a greater measure cf economic and financial stability ahd a return of general confidence. Confidence in productive industry is a prime essential to the harmonious working of capital and labour, and it is only by this means that we can hope to maintain progress and bring about the peaceful development cf our national resources.” DIRECTORS REAPPOINTED. The motion for the adoption of the report and balance sheet was carried unanimously. The retiring directors, Messrs H. J. Reimers ahd L. j. Stevens were reelected and Messrs Hutchinson, Elliffe and Cameron were re-appointed auditors, and the remuneration of the directors was fixed at the same rate as last year and the allowance to the auditors was increased. Mr V. -W. Sim congratulted the directors on the excellent results disclosed, and assured them that they had the whole-heai’ted appreciation of the shareholders. On liis motion, secondded by Mr H. Tiarks. a vote of thanks was passed to the directors, management and staff.