WELLINGTON GAS COMPANY

Dominion, Volume 12, Issue 124, 19 February 1919, Page 10

WELLINGTON GAS COMPANY

ANNUAL MEETING OF SHAREHOLDERS

The forty-ninth annual general meeting of shareholders in the Wellington C4as Company. Ltd., was held at noon yesterday. The managing director, C. Prenderga-ot Knight, LL.D,, occupied the chair.

The chairman, in moving the adoption of the annual report and balnncosl'.cet, already published, said: "I am very much pleased _to sny that the results of the year are distinctly in adyanco of 191", and the board are of opinion that the shareholders will find cause for satisfaction in the roport and bal-ance-sheet, which is now in your hands. "You aro nil, of course, aware that it is generally supposed to be the chief business of n gas undertaking to sell gas. Gas is our primary product, and out of that we must mainly expect to get our revenue. Sometimes the de-mand-is stationary; occasionally it declines nml the revenue consequently suffers; but more often, even in competition with the electric light, most gas undertakings,, have been able to nibro than hold their own, and this has been our experience in Wellington during tho l>ast year. In 1917, owing to causes with which you are familiar, the gas consumption fell off by about eight million cubic feet on the output of 1916, but during tho last twelve months the position has considerably improved, and tho year line closed with an increase of twenty-four million feet, which is on advance of six per cent. "In order to meet the abnormal exnendihire in-1918 on coal and wages, "the board decided to increase the- price of gas to 6s. Bd.per 1000 feet. That the' pursuance of this policy was inevitable will l>o obvious wheii 1 stale that during the year, the increased co3t of coal' and- wages 'of carbonisation nlono amounted to the large sum of £27,148lls. Gd. in excess of similar expenditure in 1917. It was to meet this largely increased expenditure, that the price of gas was raised, and I may now say that the'result in gas revenue has been fairly commensurate with out expectations. At the beginning of the year the position was most unjust to shareholders, and the board's action was necessary in order to restore the finances of the company to something like stability and soundness. , This has been' accomplished by the increase in the gas revenue. . . . "In the light of .present circumstances it is quite impossible to say how long the company will be compelled to maintain the comparatively high price tliat is; now being charged" for gas, but consumersinay be assured that the directors are quite alive to their responsibility in this respect, and fully recognise that cheap ■gas is as advisable and necessary in the interests of.the company as in the welfare of the consumers, and that -whenever a reduction is/possible a reduction will bp.made. Btft is.obvious that tho cost of coal and wn.?cs of manufacture are tho controlling factors. . '

Sale of Residuals. "Although, as 1 have said, gas is t'lie chief and primary producf of gas undertakings, at all events , iii this part of the world,, the residuals from gas manufacture are most important, and to some it maj':bo surprising to learn to. what different -uses coke and tar and other derivatives from coal carbonisation can be .applied, and the income derivable therefrom. The , past year has been somewhat exceptional in this respect, as the sale of eiike. and tar and. other residuals has been the largest iu the history of .the company, and the net income from these sources reaches the appreciable sum of nwirly twenty thousand pounds. Of coke alone IGiGOO tons have been sold. It is. well, however, to observe that there has been a sjieciiic cause for this large output. It has been mainly duo ,to tho shortage of coal, which has of necessity made coke more desirable both for power raising and domestic purposes, and to a large extent to the existence and needs oi the. military training camps. Now that the war is ended the requirements of the enmps will, of course, cease, but so long as the present scarcity of coal prevails coke.will continue to be in -large demand-for the: purposes I have mentioned.. ;. /- - . .... ~ .

11u5.13 not the first occasion .upon which I have had'to leinark upon, the anomalous'position, in relation to taxation that we occupy r.s a company owning and operating -a.great and necessary public service, us comuared-with similar nublic services owned unci operated" by municipal bodies. ... Strong representations have from time to tiino been made to the Minister of I'manco on this matter, and it is to be hoped that some nwsiiro of relief will bo afforded at no distant date. AVe contend that trading concerns, whether owned by the Government or public bodies, should be taxed on the same basis as privately-owned undertakings. "Last year I had to intimate, that, in accordance with the declared policy of the board, an amount of ,£11,398 whion appeared in the profit and loss account was the first annual instalment of depreciation which the board had transferred to the depreciation reseryo, tlio intention of the directors,being to transfer a similar sum year by year until the value oi the plant was finally liquidated. This year there hns been no deviation from this principle, although the amount transferred to the depreciation reserve is only shown in the profit and loss account as .£3173. The. full amount is made up by the .£BOOO which you will note has been written off tho plant account. It was found that unless tho company's assets were actually written off from profits we could get no relief in income tax from the Income.Tax Department.. For this reason the board has decided to write down- the property and plant by ■£4000 for 1917 as well ns 1918. and it is expected tliat by so doing the gain to the company in the reduction of the tax payable will.be.very considerable. , Supplies of Material. "I do not know that the conditions under which the company has been operating during the past year with, regard to' the supplies of our staple manufacturing material, coal, ami tho ever-present labour question have been worse thnn was expected, but as far as can be' foreseen there'is at present no prospect of improvement in either direction. Throughout the year it has only been with the greatest dißlculty and the most persistent solicitation on the part of the management that sufficient coal has been obtained to carry, on at the works, and this hi spite of several cargoes which .have been obtained from Australia at heavy additional expense to the company. Time after, time the stock has been reduced to a dangerous margin, and Jit no period has it been possible to provide a reserve for more than two or three weeks. The stocks throughout the Dominion are jery low, and there is scarcely "any ooal jiow being shipped from Australia. It is further anticipated that if the ■many oversea vessels with New Zealand troops which are expected early this year aro coaled, or only partially coaled, in New Zealand, coal supplies will be further heavilv depleted, and altogether the prospect or securing reasonable stocks even,for essential industries is very discouraging. It is quite certain that wo shall have to livo from hand-to-mouth ■for some time to come, and the only con,eolation . w.p have is that other indue-, [tries are suffering similar disabilities. : Value of Shares.

"During the year you will have observed (hat there has been a gradual decline in the market vnluo of the company's shares. At tho present timo they aro quoted at about. «£U ss. The value of the shares lias naturally been affected by tho reduction in the dividend, this reduction being due to the causes I have already explained. The results of the past year, will, however, I (liink, lend to convince the shareholders that (he company has not lost its power of recuperation, anl I believe ivo li'.ay have confidence that with the return of normal conditions the value of the shares will increase, and tho investment prove as good and sound ns it has previously been. Notwithstanding this, tho boiu'd has.thought it prudent, in the best interests of the company, that the finances should bo conserved as much ns possible, end has decided to recommend a dividend for the half yc-ar of 2i per cent., making 5 percent for the year, and they are confident that this action will receive the approval of-tho shareholders. "There is one other item of importance to which I wish to refer, and this is. with respect to additional capital expenditure. .Very little has been tpent in this direction for eome years; only what

was necessary, for main extensions and meters and services. We shall, iowever, have to duplicate the trunk main connecting Wellington with f ]io Miranmr works, and this will mean a faidy heavy cost, probably JMO.OfIO. The work cannot be deforred much longer, as, ap.irt from the risk of having only ono pipe to depend upon for the gas supply, the rapid growth of the gas consumption will shortly make it imperative for better provision to be made. For the latter reason the board will very soon also have to provide for enlarging the gas manufacturing plant. The present unit is rapidly approaching the limit of its enpacily, and the contemplated additions will include an extension of the retort house, and another coal etore. An estimate of the cost of these and other necessary extensions lias not yet been worked out, but it will probably not be less than .£50,000, and for this now capital, either by the issue of new shares or debentures, or partly by both, will have to be raised." Tho' report and balance-shoet were adopted without discussion. Tho meeting carried a motion by the chairman* that a dividend of 1\ per cent, for the.half-year bo paid. The officc-'bearers were all re-elected.