AUCKLAND GAS COMPANY.

New Zealand Herald, Volume XLIII, Issue 13094, 6 February 1906, Page 3

AUCKLAND GAS COMPANY.

ANNUAL MEETING. REDUCTION IN THE PRICE OF GAB. The forty-fourth annual meeting of the Auckland Gas Company was held at the offices, Wyndham-street, yesterday at noon. In the absence of Professor Brown (chairman of directors), Mr. T. Buddie w.i<\ voted to the chair. Messrs. J. Brown. T. Ching, A. Clark. X. Peacock, and J. H. Upton (directors) and 33 other shareholders were present. ANNUAL REPORT. The directors' annual report- was as follows : — The profits for the year, after deducting working expenses, coat, of "repairs and renewals, management expenses, interest on borrowed money, bad debts, and other charges, amount to £36,550 lis 4d. The directors recommend a dividend for the past half-year of Ks per share, totalling £13.922 16s, which sum, added to the dividend paid in July last (£13052 12s 6d). amounts to £26,975 3s 6d, leaving a surplus on the business of the company for the year 1905 amounting to £9575 9s lOd. ' A sale of new shares was made in March last, when 578 sharps were sold at. an average of £13 3s 7d. and yielded £2890 paid-up capital and £4727 2s premium capital. The accounts show the issue of debentures, which were all taken by shareholders. .Mr. I'pton and Mr. Ching retire from the board by rotation. They are eligible, and offer themselves for reelection. Attached to the report was a statement of accounts, which showed the results mentioned in the report and sec down the cost of manufacture of gas at £45,877 4s 3d, distribution £8462 14s Id, public lamps £2445 14s 6d. rents, rates, and taxes £3812 12s 9d, management £5731 3s 7d, law charges £129 4s 6d, and bad debts £209 15s sd. The receipts from sale of gas totalled £81,744 14s lOd, public lighting £5164 4* lOd. residual products £15,591 5s fid, and gas illtings, engines, etc., £2078 13s sd. The depreciation account showed £10,000 at credit, and the reserve fund £20,000 at credit. CHAIRMAN'S ADDRESS.

The chairman (Mr. Buddie), after apologising for the absence of Professor Brown, who was attending the University Senate at Dunedin, moved the adoption of the report and balance-sheet, and in doing so said: You will, no doubt, have noted the progress of the company's operations for another year, and I think you will agree with me that that; progress has been satisfactory. You will observe a statement which has not before appeared on the company's account. I refer to the statement of loan capital. This is occasioned by the issue of debentures, which, you will remember, was made early in the year, when the issue of £60,000 debentures at Si per cent, was authorised, of which 33,400 were taken up by shareholders, leaving 26,600 for future requirements. Your board having called for tenders for additional shares early in the year, to meet the expenditure on the. new works and further capital being required, it was considered that, as another issue of shares on a limited market would have the effect of unduly depressing the value of the shareholders' stock, debentures should lie issued to meet the requirements of the company, and that preference should be given to shareholders in taking tip these debentures. They, were all taken up by shareholders, and the increased value of the. company's stock has fully justified the policy of the board. There has been a large increase in the quantity of gas sold. representing 18,757,000 cubic feel. The total sales yielded the sum of £86.903, which shows an increase of £4450 on last year's return, nid the- residual products have realised £2437 more than last year. Your directors think that the time has now arrived when they can make a substantial reduction in the price of gas, and, after fully considering the question from all points Of view, they have decided ,to make mien a reduction. In this connection I may point out to you that in a city like Auckland, where our mains extend to great distances, involving very large- expenditure in construction, increased wear and tear and a considerable waste of gas, consumers at a distance enjoy an advantage in value received as compared with those consumers who are nearer the .source of supply, to whom the cost of delivery is much less and the quantity used by them frequently is very much greater. For this reason, and other reasons equally cogent, we have also resolved to somewhat increase the concession already made to large consumers. The reductions resolved upon, therefore, are 3d per 1000 cubic feet to all consumers, thereby reducing the price of gas to 4s 9d, and certain special discounts to larger consumers, following the policy heretofore pursued by the board. These reductions will represent a total value of about £6000. While thus considering the claims of our customers, your" directors think the shareholders are equally entitled to some consideration, and they propose to increase the dividend by 6d per share, making it Bs, instead of 7s 6d, for the past half-year. Your directors anticipate that; when established in the new works, the economies effected in the manufacture of gas will be such as to enable them to make a further reduction in the price of gas in the near future. Eight miles of additional mains have been laid, making a total of 193 miles and 17 chains. In addition to the expenditure at the new works, the increase of business at Onehunga and Devonport has necessitated the erection of a now holder at each place. At Devonport your directors have secured a piece of land adjoining the present site and the holder has been constructed thereon. Your directors recognise that the continued zealous and loyal co-operation of the company's officers and employees have contributed largely to the success, and the thanks of the shareholders are due to them accordingly. Mr. T. Peacock seconded the motion, which was carried unanimously. ELECTION OF DIRECTORS. The Chairman said notioe bad been received of the nomination of another candidate for the directorate, but it had been withdrawn that morning. Messrs. J. H. Upton and T. Ching were then unanimously re-elected. In returning thanks for his re-election, Mr. Upton said it was 14 years ago since he was elected a director. There had been a statement made that election Of an outsider had not taken place since 1876. but that was incorrect, as there was such an election 14 years ago. At that time the shares of The company were worth not quite £10, and to-day they were worth £15. He felt that that was the proper time and place to reply to the statements published by Mr. H. Atkinson in that morning's Herald. He (Mr. Upton} felt it that there should be any disposition on the part of any shareholder to dispossess any director of office, as the directors had done well for the company, and looked after its progress well. As a general ride men were not relieved of office because of success, but. because of failure, and the figures and diagrams showed how successful the company had been. He could claim for the company that its policy had been one of extraordinary success. The shares were at £10 14 years ago, but he said they were better worth £15 to-day than they were worth £10 then. The second paragraph of Mr. Atkinson's statement was:

It was reported that [ was interested in another company, winch might bins ray opinion. This referred to Northeote, where I was called upon to supply a felt want in the district. Before complying, r wrote to your company, explaining; the position, and that 1* had sufficient on hand without it. but if they had no objections I *vould promise the inhabitants to erect gas works. The company's reply was that they had no present intention of supplying gas to Northeote, and had no objection to my doing so. He (Mr. Upton) felt that that called for a reply. Some time ago the company was asked if it wa3 going to commence gas-mak-ing at Northeote, and if not Mr. Atkinson was prepared to do so. The company did not see its way to go to Northeote at the time, for it did not think it- would pay on the same basis as charged at Devonport, and it would be unfair to burden the people of the centre of population on the North Shore with the cost of supplying the outlying portions. Consequently the company replied to The Northeote company that it (the Auckland company) had no intention of establishing works then at Northcote, and had no objection to Mr. Atkinson doing so. The Auckland company had, under its Act, a 10-mile radius from the post office, and it had surrendered no right* at all. Then the company was invited to meet the Northcote company 10 arrange about, defining- a line between the districts up to which each company might, work. The Auckland company replied that it was not prepared to go toTakapuna at all just now. but it, gave up no rights at all to anyone undertaking to establish works in that district. It was quite clear it would be to tl«interest of the Northeote Gas Company to define a line, bur that line had not been defined, and that might be the reason why a member of the Northcote company should seek a position on the board of the Auckland company. Mr. Atkinson had said in his statement: In referring to the records of the company, sup plied by the balance-sheet. 1 find for several years up to 1890 iliev paid at the rate of 17 per cent. on the paid-up'capital of the company. In 1889 and 1890, while the total sale ot gas was only about 100,000,000 cnbic ieet per annum, £19,015 per annum was paid in dividends out of a total of about £40,000 per annum of revenue, the dividend on the total capital employed being Hi per cent. The balance-sheet tor the last year shows that the sale of gas was over 323.000,000 cubic feet of gas, and a total revenue of £98,042 ; the total dividend pud was only £25,253, being about Is old per thousand cubic feet of gas Sold, and th" dividend on the total capital employed was reduced to about Bi| per cent.

Mr. Upton went on to say that it was quit© true the dividend was 17 per cent, some time ago, and it was quite true that for several years it had been 15 nor cent. The impression from the statement would lie i that during; Mr. Atkinson's administration ; tho dividend was 1? per cent., and since ? then it was 15 per cent.; but that was not the case. The dividend was reduced to 15 per cent, before Mr. Atkinson left, and it was reduced for the best of reasons, that

the company could not afford to pay it. There was nothing so easy in any business as to overspend the profits, and that, was what the Gas Company had been doing. The consequence was that there was considerable starvation of the company's distributing plant. The IT per cent, was too large. The directors had many times (hiring the last seven or eight- years discussed the time when they could increase the dividend. Mr. Ching was a holder of between *00 and 500 shares, and he (the speaker) held between 300 and *00, and they would naturally appreciate an increased dividend, but it would never do to look at an important point i ko that from the point of view of self-inte.'t>st. There were many questions in the administration of a company like the

Gas Company that, depended to a certain extent upon public privileges, which had to be taken into account, and the directors early realised that they could not entertain the idea of increasing the dividends until they reduced the price of gas to the consumers. The company enjoyed public privileges, and if it was not blind to the importance of those privileges it- must act up to a high sense of its responsibilities, otherwise those privileges might- be taken away. Acts had been proposed to take away those statute rights. The company haddone its best to let both consumers and shareholders enjoy those privileges, ami the directors had consequently made up their minds that an increase could nor be made in the dividend until the price of gas was reduced to consumers. That- was a sound policy in the company's interests. Speaking personally, he might "say that it- was almosta certainty if not- next- year, oertaiuly the year after, that, they would l>e able to give the public another bite out of the profits and increase the dividend. Mr. Atkinson had referred to the shares and debentures.

Some time ago the directors took authority to issue a certain number of _ debentures. 'The capital could not be acquired quickly enough by sale of shares without depreciating the value of shares. The number of shares that this market could conveniently take without depreciation was jtrst about--1000. The directors were not willing to decrease the share value, and so issued debentures at 51 or £4 19s 9d, instead of paying the bank 0 per cent., and the debentures were all taken up by shareholders. Mi. Atkinson had criticised the method of dis-

posal of share-. The company had called for tenders in the open market, and made it possible for any person to buy a shareIt; was suggested the sales might take place through brokers. Individual brokers had, over and over again, requested that this might be so, but the directors refused. Supposing sales through brokers were allowed what would be the imputation? They must be above suspicion, and they would not be if they made private bargains with brokers. Mr. Atkinson also said:

In the true interests of the shareholders the in most premium should be obtained tor the shares, for Ui* premium capital forms a splendid asset, for the company. Again the higher the dividend paid the higher the proportionate price would lie. obtained in the event of the Bale of the works, for the principle in valuing was works is to capitalise the dividend paid.

He (Mr. Upton) asked how won't! the public deal with the company if it followed that principle? The basis of valre was not the. dividends paid, but the profit made. If they attempted to get higher prices by "bulling" the dividends, they would scon find their mistake. He again thanked the shareholders most sincerely for their condonee in reelecting himself and Mr. Ching. They stood there 14 years ago, and had had a good run since. The company was sound and could stand any competition, but they must not blind themselves to the fact that there was competition in the air. The City Council already had the thin end of the wedge in. He -would. be the last to suggest that there was any danger to the G-a* Company from the installation of eiectrio light. Wherever the two had been in competition it had bee>ri shown that electricity was the rich man's light and gas the poor man's, and it was on the poor man's lightthat the company lived. Air. Ching expressed his thanks for reelection in a few brief re-mark*.

The auditors. Messrs. A. W. Thomson and J. P. Buddie, were reappointed, at a remuneration of £50.each.

STATEMENT BY THE ENGINEER.

Mr. Chennery Sxiggate, the company's engineer, said he thought; it only fair to the foreman, men and officials of the company to refute an attack that had been made on the results of the working. During the three years of Mi'. Atkinson's official position the average amount of ga,s made per ton of coal was 11,678 ft. Now, in the next year, the first year in which he (Mr. Suggate) took charge of the works, the make rose 368 ft per tou on the same class of coal. That, extra gas was almost absolute profit, and on the 15,000 tons carbonised that year the extra profit represented about £1400. During the past year (1905) the make per ton jumped 600fr over the average of those three years. Reckoning it on the same basis, they would find that that represented to the company, an extra profit of about £4700. Reckoning on the basis of that three years for the past nine years, it would be found that the extra gas manufactured had been a saving to the company of nearly £18,000 in those nine years. Since 1896, wages and cartage had gone up considerably, representing nearly 6d per 1000 ft. During the present year the cost, of gas had been about the same as* in 1896, and in spite of extra charges they would see that there had been a saving of about 6d per 1000 ft manufactured. The new works bad made a considerable improvement on that, and during the past year the works were enabled to make gas at considerably less than ever before, and when all the gas was made at the new works, as would bo done very shortly, it would be made at a less price than at present. VOTES OF THANKS. Mr. J. Batger proposed a vote of thanks to the directors and officers of the company for their successful management of the company's affair* in the past year. He spoke in high terms of the good management, in the successful removing of works, etc., and said the directors looked well after the interests of both the public and the company. Mr. Withy, in seconding the motion, said he was very glad to hear Mr. Upton's re marks about public privileges. The position of a company 'like that was one of public privilege, anil the only way to obtain the sympathy and confidence of the publio was to do the best to reduce the price and supply the best, article, and that was what the flireetqrs always did. It was certain that the trend of public opinion was towards ending monopolies, and the best way was to treat, the public as a shareholder in the company. (Hear, hear.) The chairman and secretary briefly returned thanks for the vote.