BREWERY YEAR.

Auckland Star, Volume LXVIII, Issue 154, 1 July 1937, Page 10

BREWERY YEAR.

DOMINION COMPANY.

MARKED EXPANSION.

MODERN PLANT INSTALLED

Continued expansion, a record turnover and a progressive policy Jn providing for future developments were stressed at to-day's annual meeting of Dominion Breweries, Limited, held in the Chamber of Commerce this morning.

The chairman of directors, Mr. L. J. Stevens, who presided, said:

Sales 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 uulielpful criticism —was the sound and 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 success of the company is substantially due to the courage, enterprise, ability and optimism of our managing director, Mr. H. J. Kelliher. His ability and enterprise is now recognised far beyond the ! confines of Dominion Breweries, Limited.

Sha-eholders will know that Dominion Breweries, Limited, is to-day recognised as one of tlie major industrial enterprises operating in y»3w Zealand. Its trade extends throughout the country and even beyond to the islands of the Pacific, and the ships trading from overseas 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 remunerative outlets for a capital sum of £188,427, or, with sums then credited to reserves account, a total of shareholders' funds amounting to £215,002. In every department of the company's activities the past year has been a most notable 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. The full scheme of reconstruction and extension is still in progress. At the moment the major work is the erection of a new brew lioitee fronting the Great South Road. This building, when completed, will have a height of over 80ft, and will become a landmark for many miles around.

In this building 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 requirements of the market. Further Trade Outlets. During the year further guaranteed trade outlets have been secured by the company by the purchase of freehold premises and the leasing of hotels. By these measures the company's trade has been further consolidated. I think I may now state that the company's trading position is definitely assured, and the stage set for further progressive development of the" company.* Purchasing Power. ? The whole Dominion has recently enjoyed the benefit of increased purchasing power, which has served to give the required tonic effect to business, with the result that large capital resources lying dormant during the years of the so-called depression 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 suggestions more or less-in the nature of propaganda are made on the necessity for revision of our licensing laws. I understand that some revision is under consideration by our Government. In many ways our licensing laws are out of date, and in nj way suited to the conditions or necessities of our present population. I would welcome legislative enactments that would give greater security to the 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 licenses in cities, such as Auckland, to building owners prepared to furnish tlfe necessary accommodation. Redistribution of licenses is advocated by many interested parties, but 'this, in my opinion, is not a, solution., The removal of existing licenses to-centres of population will, in my opinion, only help to perpetuate the monopolistic system at present existing, and turn into profitable investments more or less worthless assets. New Licenses Wanted. Myopinion is tMt legislation should permit the granting of absolutely new licenses.; If the Government is not prepared to..give this right, .then I consider the Government' should resume surplus' licenses ;ftt, present valuations, and grant licenses in new locations. To provide for reasonable competition new licenses "hould not be granted to any organisation connected with the : servicing or control : of, houses in ; the ; immediate vicinity/of the location selected for the grant of new licenses. V ,

Any .amendment , of the licensing law should n peal the invidious distiuction which requires notification of" sales of

liquor consigned to residents in nolicense areas, even where such nolicense areas are immediately adjacent to licensed areas. Likewise, reasonable provision should be made enabling entertainment of guests in licensed premises more in keeping with the enlightened views of the present day. Heavy Taxation. Before considering in detail the matter of the year's accounts, I would like to draw attention to the large provision required for payment of land and 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 the year for beer duty, Customs duty and sales tax. • I recognise that a certain amount of taxation is necessary to meet the requirements of the social poli-cy of the Government. This policy lias my cordial endorsement. At the same time, I think that the welfare of the country requires that as large a sum as possible should be left available to industrial enterprises for future development of their industry. This policy will be to the ultimate advantage of the Government and the country. High taxation may bring in immediate revenue requirements, but a I far-sighted policy will show that tax reductions are often more efficacious from a revenue standpoint.

The State has much more to gain by j the development of industry than from j a policy restrictive of opportunity of expansion. I would commend our Minister of Finance to give this thought his careful consideration when framing the next Budget. The Year's Accounts. The accounts for the year balance at £292,030, compared with the previous year's total of £151,700. The purchase of freehold hotels is reflected in an increase in the net book value of land and buildings from £10,177 to £00,833. Similarly, the value of plant, machinery, furniture and fittings has increased from £47,486 to £89,149. This increase isLdue 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 sundry 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, j All these figures speak of progress and development. On the liabilities «ide, paid capital shows an increase of approximately £80,000, and a new and attractive item appears for the first time in the shape of general reserve account with a credit of £27,235. Sundry creditors show an increase of £15,900. Income tax reserve stands at £24,000 and appropriation account is £18,635. At balance date capital unpaid totalled £11,229. In the profit and loss account gross profit shows an increase of over £35,000. After providing the substantial sum of £8311 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 of £23,260 is available for appropriation. Dividend 9 Per Cent. The interim dividend paid in December 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 £|jb,6po to the. general reserve fund, and tot-- carry 'forward into next year's accounts the sum of £962 18/7.

i may say that, apart 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 Sales. In seconding the motion for the adoption of the report and balance-sheet, the managing-director, Mr. H. J. Kelliher, said:—

"As far a-s the balance-sheet itself is concerned, the actual results achieved ■speak for themselves and require very little elaboration from me. During the 12 months under review the company lias further consolidated its position and has laid a sound foundation for the future.

"What is more, the company's products continue steadily to rise in public favour, so much so that the first three months of the new financial year show an increase of well over 30 per cent, when compared with the corresponding period of last year.

A Model Brewery.

"The rapidly increasing demand for Waitemata products necessitated substantial additions and alterations to the existing buildings, plant and machinery, 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 today the Waitemata Brewery is recognised as the model brewery of New Zealand.

"However,, we were not content with just brewing the best possible beer and maintaining a uniform quality when bottled; our further aim was to ensure that our draught Waitemata and Dominion Bitter would be served to our customers in the same high quality as they leave the brewery.

"This has entailed a great deal of research and experimental work, and I am pleased to say that we have now succeeded in devising a scientific system for the storing 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 installed at the Hotel St. George in 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 the same bacteriological influences as milk, and one of the main 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 is the company's own patent, embraces a 270-gallon storage cylinder—made of Firth's All-British Staybrite steel, and 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 their appreciation to a marked degree. . f A Profitable Investment. A few words regarding Dominion Breweries shares as an investment would, perhaps, not be out of place. 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 1-3 per cent per annum

"If we take the ease of a. .shareholder ,vho invested £100 at the inception of the company, and who, since that time, took up iiis full quota of shaces as offered at subsequent issues, such an investor would now hold a total of 250 shares, for which lie would have paid £275. .If the shareholder sold these shares at to-day's market price and added all dividends received, his total realisation would amount to £572 2/0, leaving him with a net profit of £297 2/6. The average capital invested by such a shareholder since the formation of the company would be £125, and the average profit over an effective period of six years and 10 months would be 33 1-3 per cent per annum at simple interest.

"It will thus be seen that, notwithstanding the very difficult times 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 future for a sustained earning capacity of the capital invested in our enterprise."

"In conclusion, ladies and gentlemen, I would like to express my appreciation of the valuable work and whole-liearted cooperation rendered by the members of the staff 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 past year's results are in no small measure due to their loyal service and I feel sure you will all gladly endorse my remarks of appreciation. Special credit is due to our head brewer, Mr. Morton Coutts, and his band of workers in upholding the high standard of quality set by Waiteniata products.

"I have much pleasure in seconding the report and balance-sheet."

The directors' report and annual accounts were unanimously adopted. The retiring directors, Messrs. W. J. Coutts and H. Reimers, were re-electcd unopposed and the auditors reappointed. A vote of thanks to the directors, proposed by a shareholder, was carried by acclamation.