COMPANY NEWS

Press, Volume LXXV, Issue 22661, 16 March 1939, Page 13

COMPANY NEWS

MACDUFFS, LIMITED V CHAIRMAN REVIEWS PROSPECTS The first annual meeting of shareholders of Macduffs, Ltd., was held In Wellington last week, Mr Charles Todd presiding over a good attendance. The official report of the proceedings issued in Wellington on Tuesday states that in moving the adoption of the balance-sheet accounts, Mr Todd said; “As you know a receiver was appointed on November 1, 1938. It was arranged that your present chairman of directors should select a new board and endeavour to rehabilitate the business ra'.her than have it - go into liquidation. This proposal received the unanimous approval of shareholders at a meeting on November 18 last, and also of the creditors at a subsequent meeting held on November 22, 1938 The previous board other than Messrs J. S. Land and W. J. Candy resigned, and the new board operated as from November 19, 1938. “Since that date a circular letter, has been dispatched to shareholders explaining developments and a further meeting of creditors has also been held. The proposals of your directors have been endorsed and the bankers have also approved of our actions. The directors received an offer for our freehold premises and for our stock from a rival organisation, but the acceptance of this offer would have left practically nothing for our preference shareholders apart from a total loss to the ordinary shareholders. The directors, in view of the outlook and the advent of the new import regulations, did not hesitate to turn down this offer, this action being endorsed by the second meeting of creditors on December 21. Stores to Close “The returns for November and December, 1938, vhen the company ,-earned a net profit of approximately > £9OOO after providing for depreciation, ’’were very satisfactory, but it was quickly apparent to the directors that certain of our scores should be closed clown. To this end your representatives have been giving close and careful attention to the possible earning capacity of each branch. The second store in Christchurch was closed on February. 25, and the .Manners street store in Wellington will be closed by the end of March. One difficulty is that the company is liable for heavy rentals for a period of years in eacn case, and the sub-letting of such premises at a minimum loss has given • the board no little concern. However, negotiations are proceeding, and we are hopeful of concluding arrangements which will be fair and reasonable, • , “The figures disclosed in the balancesheet speak for themselves. At the meeting of shareholders in November it was announced that up to the end of October, J 938, the estimated loss was £28,651; this figure, as explained, did not provide for depreciation or for certain contingent liabilities and was baaed on the estimated stock valuation. We are pleased .to report that our secretary’s estimate of the value of the stock was approximately correct, and after making proper allowances for depreciation amounting to £6773 and providing for liabilities not previously taken into consideration, reserves and stock adjustments, totalling £8960, and deducting the net profit earned in November-December, the debit in the appropriation account as at December 31, 1938, is £34,384. The directors have deemed _ it wise fully to face up to the position and to indicate to shareholders just what the position is. Stock Position "Under the circumstances, the inventory value of the stock at £149,995 may be regarded as very satisfactory. 'At the inception of the company, the book value of the stocks of the two companies, Shillings, Ltd., and Macduffs, Ltd, was £282,672, and m the reduction of this figure the stock problems have been very difficult. It will he pleasing for shareholders to know that a large proportion of existing stock has been purchased at prices lower than replacement cost. The policy of the company will be to still further reduce stocks in harmony With requirements. Such reductmns automatically, improve the banking position. “At October 31. 1938, the company s liability to its bankers was £158,120. During December, this figure was reduced by £25,000, and the receiver had al the credit of his account at December 31, £41,746. After taking into account accrued interest, the total reduction in the company’s liability to its bankers was £65,671, exclusive of the receiver’s current liability in respect to trade creditors. This reduction in the short period .of two months at no material sacrifice of profit to •the company can be considered an achievement and endorses your present board’s decision to carry on the

business “While the receiver is still in legal possession of the business, your curec--_tors are actively controlling affairs Vrith the receiver’s co-operation. Until satisfactory finance is arranged this must necessarily remain the position. Property Company “The directors are still of the opinion that the only satisfactory way in which to meet the financial obligations of the company is to form a property company to acquire the freehold and leasehold interests in Cuba street, Wellington, Palmerston North, and Lower Hutt. From this source, something liu-p £90,000 should be secured, which would practically clear up the overdraft. With fresh arrangements with our bankers, on the basis of accommodation in respect to our stocks and other assets we should then have sufficient working capital and be in a position gradually to liquidate our indebtedness to our deferred creditors. ■ Negotiations are in train in regard to the property company, and definite proposals will, we hope, be shortly placed before you. For the protection of both creditors and shareholders, the basis of taking over the property will be supported by valuations of at least two leading independent valuers. Much remains to be done to place Macduffs, Ltd,, on a satisfactory basis, and, if nothing unforeseen happens, your directors hope gradually to overcome all difficulties and ultimately place the company on a profit-earning basis.” .