DOMINION BREWERIES

New Zealand Herald, Volume LXXVII, Issue 23699, 4 July 1940, Page 14

DOMINION BREWERIES

BIG TRADE INCREASE CONSISTENT PROGRESS STRENGTH OF FINANCES A substantial increase in the business of Dominion Breweries, Limited, in the past financial year, was reported by the chairman of directors, Mr. L. J. Stevens, at the 10th annual mooting of shareholders in Auckland yesterday. The consistent progress past years, he said, had been fully maintained, resulting, in a gross profit on this occasion of £329,705, or £77,267 more than that of the previous year. Continuing, Mr. Stevens said: —"This is the best evidenco of the consolidation of the company, and its strong financial position. All departments contributed in full measure to the results obtained. Even now, in spite of economic difficulties arising from war conditions, opportunity of expansion and progress is not lacking. Many areas of New Zealand still offer substantial markets for the company's products. At the same time, duo allowance has to be mado, of course, for groatly changed conditions.

Accounts In Modern Form "Hitherto, the provision of nocessary buildings, plant and equipment has been a controlling factor in our trado expansion. The company is now in an unrivalled position, not only to maintain the high quality of its products, but is also reaching a position to meot markets awaiting development.

"On this occasion the accounts are presented in accordance with modern principles of accountancy, so as to show separate groupings of fixed assets and floating assets, and similarly to show in separate totals shareholders' funds, secured liabilities and trado creditors and open accounts. In adopting accounts in this modern form we aro merely following the well-known policy of this company to lead in enterprise and to give the fullest information to its shareholders and to the public generally. Our action in this respect has already been most favourably received.

"The accounts balance at the large sum of £958,8.'36. The same relative figure in the previous year's ncocunts, if presented in the same form as this year's accounts, would have been £887,920. The principal alteration is under the heading of lands and buildings. Purchases made during the year, and expenditure on building after allowance for depreciation, increased the value of land and buildings by £40,000. Plant and machinery increased by £25,000, stocks by £9661, sundry debtors by £17,594, while values of hotel leases and investments have been reduced bv £4068.

Higher Tax Provisions "On tho liabilities side of the balancesheet shareholders' funds are shown at £501,428, comprising capital £350,000, general reserve £106,250 and appropriation account £45,178. Tho amount owing under mortgages over land and buildings is £250,014. a reduction compared with the previous year of £22 SO. The amount duo to bankers is £12,367 against which cash on tho assets side of £9657 is a sot off, leaving the net indebtedness at the nominal sum of £2710. This sum compares most favourably with a net indebtedness to our bankers at March 31, 1939, of £41,084. The remaining figure, 'trade creditors,' including provision for taxes and staff bonus, amounts to the largo sum of £189,027. Tho relevant figure in the previous year's accounts amounted to £138,186. "It may be unnecessary for me to say that the increase in tho provisions made in the accounts under review is bound up in the one word, taxes, and tho apparent discrepancy in the relative position of gross and net profits covering the last two years is due to the reservation made for taxation. The 'trade creditors' portion of tho grouping is actually a lower sum than the relevant total in tho previous year's accounts. The provision relates to taxes and does not take into account the largo sums paid by tho company from week to week in excise on beer, Customs duty and sales tax. Importance to Country's Economy

"The importance of the company in tho economy of New Zealand will bo exemplified by a fow figures which the secretary has prepared, giving a statoment showing just how each £1 ot tho company's turnover from its wholesale business is disbursed. This is as follows:—Taxes, 9s 6d in £1; goods and materials, 5s lOd; wages and expenses, 3s od; shareholders' dividends, lOd; reserves, sd; total, £1 in £l. This calculation is made in terms of turnover, and does not relate in any way to considerations of profit. "Under present circumstances, wo recognise our and no ono of us must complain at being called upon to bear burdens in accordance with our capacity to pay. At tho same time, it may not bo out of place to suggest to those responsible for our Government not to overlook tlio fact that burdens on industry and taxpayers must not continue 0110 day longer than tho present emergency conditions require.

Energetic Outlook Essential "Progress and development are indissolubly combined with maintenance in the hands of large industrial organisations of substantial sums to cover costs of enterprise. Without enterprise the condition of the country will become static, and then deterioration will set in. "We must maintain a dynamic outlook if enterprise is to continue, and for enterprise to continue funds must he available. The soundest and best principle is to leave available in the hands of industry a sufficient sum to provide this enterprise. "Tn view of the tax liability it is gratifying that your directors aro ablo to reconimond a dividend at an unchanged rate. The profit under the circumstances is reasonable, and the transfer of further sums to the "company's reserve fund will assuro shareholders that the valuo of thoir investment in the company is being maintained and increased. "As is usual, your managing-director, Mr. H. J. Koliihor, has given to the company's numerous employees full credit for tlio results achieved. No doubt, Mr. Kelliher will refer to his recommendations in respect of staff bonus, and also payment to members of the staff on active service." _ Mr. Stevons then moved the adoption of the report and balance-sheet, which he asked Mr. Kelliher to second.