LARGER PROFIT

Ashburton Guardian, Volume 71, Issue 37, 23 November 1950, Page 4

LARGER PROFIT

ASHBURTON GAS COMPANY ANNUAL MEETING HELD TO-DAY A higher profit than in the previous year was reported by the chairman (Mr W. B. W. Bell) at the annual meeting of the Ashburton Gas, Coal and Coke Company, Ltd., this afternoon, when there was a small attendance of . shareholders. The chairman, in moving the adoption of the annual report and balance sheet (already published), said that the result of the year’s operations showed an improvement over the previous year, the balance carried forward to the Profit and Loss Appropriation Account amounting to £1672 Os Bd, as against £216 19s lid in 1949. On the revenue side of the Profit and Loss Account, sales of gas showed an increase of £1525, tar £105,, coke £753, appliances, fittings, etc. £247, or a total of £2630. This was offset to a large extent by increases in expenditure, coal rising by £877, salaries and wages £396, bank interest £IOO, depreciation £358, and other items £lB3, while repairs and maintenance showed a reduction of £759.

The balance sheet showed that plant, mains, meters, retorts, land and buildings stood at £50,876. Sundry creditors at £3024 were somewhat higher than last year, while stock in hand was lower and investments remained the same. On the liabilities eide, the amount reserved for taxation record ed an advance of £458 owing to the larger profit earned. Bank overdraft had dropped by £782 14s to £16,877 2s lid. Thoroughly Up-to-Date The construction of the new purifiers was completed during the year, said the chairman, and the works were now thoroughly up-to-date. All the plant was functioning efficiently, and buildings were in a good state of repair. A new six-inch feeder main was installed in Wills Street West and extensions to mains in Allens Road, Creek Road, Princes Street, had been carried out, and these additions have augmented the gas supply in these areas. The old washer, which did service for many years, and one of the exhausters, had been sold. The withdrawal, by the Government, of the subsidy on coal and the increase of 33 1-3 per cent on railway freights was an exceedingly severe blow to the gas industry of the Dominion, and the resultant steep increases in gas-manufacturing costs had seriously affected all gas-producing companies, added the chairman. Insofar as Ashburton was concerned the abolition of the subsidy and increased rail charges advancod the cost of coal from an average of £1 6s 3d a ton to £2 16s 6d a ton—or an increase of 115 per cent. These heavy increases caused the directors profound concern, and they had no option but to increase charges for gas, tar and coke. Eventually, the Government was apprised of the fact that many companies would find it difficult even to exist, and that its actions had been responsible for lifting the prices for gas far beyond a competitive basis. So, recently, it appointed a committee to investigate the effect of the withdrawal of the coal subsidy on the industry. The company has furnished this committee with information regarding local difficulties, but, eo fai', has not heard what recommendations have been made to Cabinet.

The events of the last 10 years had taught some valuable lessons, not the least of which was that the gas industry was particularly vulnerable to the effects of inflationary trends. Increases in wages were instantly reflected in company' costs, a big portion of the cost of coal and other materials being basically wages. The avenue followed over the last year or so of reorganisation and installation of new plant at the works would not be open in the same degree in meeting future increases in costs, should they occur. Throughout the war years and afterwards, returns on gas companies’ shares were depressed to a low level, while the remuneration of wage-earners and most other classes was increased, with the result that shareholders had been required to bear an undue share of the burden of rising costs.

State Houses The long, continued representa--1 tions by gas companies to the Government to instal gas appliances in State houses, so as to meet the wishes of tenants to buy the fuel they desired had, after being disregarded for a decade, recently been successful. In the near future the Government might find itself in an awkward plight through inability to meet increasing demands for electric power, heat and light. This situation, which appeared to be not far distant owing to the mild winter and lack of rain in the back country, might easily have been minimised by the Government adopting a generous policy toward the gas industry. “Our industry,” said Mr Bell, “should be treated for taxation in the same manner as its competitors, the electric power boards. That is to say, the gas companies should be placed in a separate category, as are public services. With a little encouragement this company’s mains and services could have been further extended, and this would have assisted power boards to avoid the unenviable risk they are now running 'of being obliged to ration electricity.” Hydro-ele'ctric works now under construction, from which the bulk of future electricity supplies would be drawn, were likely to reflect the present high costs of wages, plant and materials. Consequently, the additional power would presumably be much more costly than the present power from Lake Coleridge, the Waitaki River and Highbank, the first two being constructed during a period when costs were comparatively low. “It was regrettable to have to record the death of Mr E. B. Newton, in September last, said the chairman. Mr Newton had been a director for

23 years and his sound, practical knowledge and experience were of benefit to his fellow directors and to shareholders generally. He had given considerable time to the company’s affairs and used every endeavour to build up a good business. Mr I. M. Hamilton was appointed by the board to fill the vacancy. The recommendation of the directtors that the credit balance in the Appropriation Account be carried forward, was adopted. The retiring directors, Messrs E. W.

M. Cole and I. M. Hamilton, who were the only ones nominated, were reelected. Mr E. Brophy was reappointed auditor. The customary votes of thanks were extended to the directors and staff. At a subsequent meeting of directors Mr Bell was re-elected chairman.