BRITISH TOBACCO CO.

Dominion, Volume 29, Issue 80, 28 December 1935, Page 14

BRITISH TOBACCO CO.

Comment by Shareholders DIRECTORS’ VIEW The ordinary general meeting of British Tobacco Company (Australasia), Ltd., was held in Sydney on December 12, Mr. Arthur John Warry (chairman of directors) presiding. In moving the adoption of the report and balance-sheet for the year ended October 31 the chairman said that taking the assets side of the balance-sheet first, “shares in subsidiary companies” showed no change, it being the same figure as last year,- namely. £7,722,192. "Debtors ami debit balances” showed an increase of £l2 18/2, while “cash at bankers" was £7SS 12/6 greater than last year. On the liabilities side of the balance-sheet the issued preference and ordinary capital was the same as last year, while "creditors and credit balances” had decreased by £603 7/2. Turning to the profit and loss account, the net profits for the year, after deducting all chayges and expenses of management. taxation, etc., amounted to £585.949 • 13/6. Out of this amount the dividend of 61 per cent, on the issued preference shares had been paid, absorbing £96,507 5/-, and four interim dividends, totalling 6 per cent, per annum,- and amounting to £488,067/10/8. had been paid on the issued ordinary shares. After deducting the foregoing payments, and adding the amount brought forward from the previous year, namely, £33,396/7/5. there was left an available balance of £34,771/5/3. which the directors recommended should be carried forward. Cost of Imported Leaf. In his speech last year the chairman called attention to the material extent to which leaf prices in America had increased over the prices ruling in the previous year, and explained that as a result the manufacturing costs of the subsidiary companies would be substantially increased. In order to meet this extra cost the subsidiary companies increased the prices of or made the necessary adjustments in certain brands of tobacco and cigarettes. Nothwithstanding the increase in prices, the chairman said he was pleased to be able to report that as a result of the continued improvement in the economic situation in Australia, the sales of the products of the subsidiaiy companies had shown an improvement over last year. With regard to tjie present leaf buying season in America, from advices received since the sales opened, it would appear that while in -some few instances leaf prices had receded, in others the prices had been maintained, and in some instances increased. It was too early at present to say what effect the increases would have on manufacturing costs. It would also appear that growers in America were asking for production to be reduced in the next growing season, and if this request was acceded to it would undoubtedly result in an increase in American leaf prices next buying season. Rate of Dividend. The directors realised that there had keen some unrest among shareholders, which was probably due to the lack of information in regard to the financial position of the subsidiary companies. The directors assured shareholders that there was no justification for this, as the operations of the subsidiaries were quite satisfactory. Trade was good, and the future looked*most encouraging. Until, however, the effect of the changes in American leaf prices on manufacturing costs had been ascertained it was impossible to make any forecast in regard to profits. Shareholders could rest assured that the position would be carefully reviewed so soon as the leaf situation had been clarified. Messrs. G. 0. Bennett and D. 0. Hawke expressed the view that the rate of dividend was unsatisfactory when compared with dividends which were now being paid by other manufacturing companies, anil thought that the directors should take the shareholders into their confidence so that shareholders might know the exact position. , . The chairman replied that the subsidiary companies had been faced with exceptional difficulties during the last t wo years on account of the increased price of imported leaf, and that it was impossible at the moment to make any forecast until the present leaf buying season in America had been completed, but that the position would be carefully reviewed so soon as the leaf situation had been clarified. There was no justification for any uneasiness on the part of shareholders, as the business of the subsidiary companies was quite satisfactory. The resolution adopting the balancesheet and report was carried unanimously.