N.Z. BREWERIES LTD.

Auckland Star, Volume LXII, Issue 166, 16 July 1931, Page 10

N.Z. BREWERIES LTD.

LAST YEAR'S OPERATIONS.

AFFECTED BY DEPRESSION".

DIVIDEND REDUCED TO 12i PER CENT.

The annual report of the New Zealand Breweries, Ltd., presented to-day at the annual meeting of shareholders in Wellington, states that after writing off depreciation on buildings, plant, machinery, rolling stock, etc., and paying a sum of £425,320 12/4 as excise duty, and making provision for land and income and debenture taxas, there remains a net profit of £165,878 4/1, to which there is to be added the amount brought forward from last year, £13,307 7/4, making £179,185 11/5. From this amount is deducted £68,266 18/9, being interim dividend paid for the period ending September, 1930, leaving the sum of £110,91S 12/S to be dealt with. The directors recommended that of this amount £30,000 should be placed to the reserve fund, £68,266 18/9 for the payment of a dividend of 6} per cent for the half year, making 12Z per cent for the year, "and that £12,651 13/11 should be carried forward. Net profits and dividend rates in recent years have been as follow: Dividend Net profit. rate. £ Per cent. 1925 103,220 10 1026 ...... 109,540 10 1927 ...... 97,372 10 102S ...... 121,331 10 19°9 ...... 128,84S I>J . . 123,038 lw *1931 ...... 165,878 12* ♦This is the first year in which interest on debentures has not been a charge against profits.

In moving the adoption of the report, balance-sheet and accounts the chairman of directors, Sir Alfred Banlcart, said that, owing to the continuance of the world depression, from which New Zealand has not been exempt, and to the increased excise duty imposed last July, the year had presented problems which have been both formidable and embarrassing. Although shareholders be a little disappointed that the late of dividend had not been maintained, he hoped they would agree that the directors had met very trying conditions 111 the best interests of both -the public and themselves.

Effects of Capital Changes. . Although the net profit shown in this , Year's profit and loss account is approximately £42,000 more than that shown last year, it must not fee concluded that the company had made a greater proftt by that amount, as it had to be borne in mind, in comparing the accounts now presented, that the rearrangement of the capital account, by conversion of almost the whole of the debenture-hold-ing into shares, had relieved the company from payment of debenture interest, which had always been provided before the accounts were struck. As against this relief, the company, instead of providing interest on debentures, had this year to provide for dividend on 342,271 additional shares converted from debentures, and also had to provide for increases in excise duty and land and income taxes. In order to assist customers, and consequently the public generally, they decided to carry as much of the increased duty as was possible, and by this means they had been able to stabilise the prices charged for bottled beer at the same level as formerly existed. Heavy Taxation. The alteration in the incidence of land and income taxation resulted in an increase in the amount payable under this head. He regretted to say that the increase was in excess of the 10 per cent which the Finance Minister anticipated would be the result of the alterations, and, as a consequence, the amount reserved in last year's accounts for the payment of land and income taxes was found to be nearly £9000 short of the actual amount required. These additional charges, which were quite beyond the company's control, had substantially reduced the surplus, so that after making allowances —unfortunately, • on a lower scale than formerly—for depreciation on land and buildings, plant and machinery, rolling stock, and so on, and providing for all charges for the administration of the company, they had made a gross profit of £591,198 16/5, from which the revenue officers had taken by way of beer duty £425,320 12/4, leaving a net profit of £165,878 4/1, or, after adjusting the interest on the debenture capital, £25,022 15/5 less than last year. The sum of £13,307 7/4 carried forward from last year was brought into the appropriation account, making £179,185 11/5 available for distribution.

Strengthening Reserve Fund. In view of the industrial conditions prevailing in New Zealand, the reduction in the earning power of consumers whicil must be reflected in next year's accounts, and to the possibility of further increases in taxation, which would further adversely affect the position of the company, the directors considered it prudent to reduce the dividend and to strengthen the reserve fund. Accordingly, they recommended that the sum of £30,000 be placed to reserve fund, thus increasing it "f,o £115,000, and that a dividend on the share capital of the company at the rate of 12J per cent per annum be paid, absorbing £136,533 17/6, and that the balance of £12,651 13/11 be carried forward.

Balance Sheet Items. The balance-sheet showed that land and buildings stood at £525,188 2/8, or £17,589 less than last year, due to sales of certain properties which were not required for our business, and to provision for depreciation. Machinery and plant, etc., were valued at £118,497 11/11, or some £0215 less than last year. Stocks on hand, and advances against barley and hops totalled £174,152 8/5, or about £2300 more than last year, which would show that they had underestimated the decrease' in sales which it was anticipated would be brought about by the increase in duty. Investments,' which included secured advances, had increased during the year by £70,124, and stood at £509,500 11/4. Book debts consequent upon decreased sales were £10,133 less and stood at £134,075 3/10. ■ Cash at £50,218 15/11 was £19,789 12/7 more than last year, when £25,000 debenture interest was paid before the : closing of the accounts, whereas this year they only had 'to pay £1034 at that date. The item "goodwill" had now entirely disappeared from the accounts, upon which shareholders were to be congratulated. On the liability side there were alterations in both the capital and debenture accounts, consequent upon conversion of most of the debenture stock into shares; the two together now stood at £1,157,642.