MOSGIEL WOOLLEN FACTORY COMPANY.

Otago Daily Times, Issue 7722, 17 November 1886, Page 3

MOSGIEL WOOLLEN FACTORY COMPANY.

The thirteenth annual meeting of the Mosgiel Woollen Factory Company (Limited) was held at the registered offico of the company, High street, yesterday afternoon. Mr J. Roberts oocupied the chair, and there were about 30 shareholders present.

The following report was presented to the meeting:—

The directors have pleasure iv submitting their thirteenth annual report and balance sheet to the shareholders for the year ended 6th October last, and are glad to be able to announce that the result of the past year's business hits been satisfactory. The directors desire to place on record the great 1038 the company have sustained during the jear in the death of Air R. Gillies. Mr Gillies has from the Initiation of the company occupied a seat on tho board, aid his business ability and tsct were ever exercised t > the fullest in the interests o the company. To fill tho vacancy caused by Mr uillies' death the directors called to the board Dr -John Hislop, who retires this year by rotation. After providing for all known and anticipated losies, making the usual allowance for depreciation on plant (£2ouO), also writing off £144 17a 7d from the warehouse property, and providing for the Interim dividend (£2800.) already paid fn April, the profit and (loss account Bhows an available balance of £3231 I6s 10d, which your directors recommend for disposal iib follows:—To payment of dividend at the rate of 10 per cent, per annum for the half-year ended tth October, £28 0; and the balance, £131 16a lOd, to be carried forward to new account. The retiring directors are the Hon. Mr Holmes, M.L.0., and Mr John Hislop, LL.D., who are eligible and offer themselves for re-election. The auditors, Messrs William Brown and Walter Hislop, also retire, but are eligible for re-election. The following is the balance sheet :— Liabilities. £ s. d. S s. d. Capital, 16,000 shares at £5 ... ... 80,000 0 0 less 16,000 uncalled shares at 30s ... 24,000 0 0 56,000 0 0 Reserve fund ... ... 19.000 0 0 Loans payable ... ... 10,000 0 0 Bills payable ... ... 614 7 10 New engine account ... ... 512 17 1 Suspense account for contingent losses 1,000 0 0 Colonial Bank of New Zealand ... 11,517 19 8 Outstanding accounts, and 2$ per cent. discount on book debts ... 929 7 9 Dividends unpaid ... ... 153 15 10 Balance of profit and loss account ... 6,031 16 10 Less interim dividend 6th April 1886 ... 2,800 0 0 3,231 16 10 £108,860 8 0 Assets. £ s. d. £ s. d. Plant ... ... 52,487 14 7 Leaadopreciatlon written off .„ ... 2,000 0 0 50,487 14 7 Electric light plant ... ... 860 0 9 Kaikorai factory machinery ... 968 IS 2 Land account ... ... 3,795 8 0 Warehouse property ... 4,725 17 7 Lessdepreciatlon written off ... ~... 144 17 7 4,581 0 0 Office.furnlture ... ... 25215 10 Book debts ... ... ... 12,620 1 8 Cash in hand ... ... 7 5 0 Goods manufactured and in process, and taw material, ... ~, 35,237 5 6 £108,860 5 0 Profit and Loss Account. Dr. £ s. d. To Fire insurance ... ... 317 12 7 ~ Interest and discount ... ... 3,755 18 1 -~ Charges, salaries, factory maintenance, and working expenses ... 7,240 1 8 ~ Suspense account for contingent losses ... ~. ~. 1,000 0 0 „ Bad debts ... ... ... 12 19 7 „ Depreciation on plant and warehouse property ... ..-. 2,144 17 7 „ Interim dividend for <» half-year April 188S ... ... £2,800 0 0 „ Balance to bs dealt with ... ... 3,231 18 10 6,031 18 10 £20.509 6 7 Cr. By Balance, Oth October 1885 ... ... £5859 13 1 Less dividend for half-year 6th October 1885 ... £2800 Less carried to -reserve fund ... 2000 Less carried to new englneaccount... 1000 5800 0 0 £59 13 1 „ Goods account ... ... 20,446 10 6 ~ Transfer fees ... ... 3 3 0 £20,509 6 7 We have examined tho books and accounts and the vouchers and other documents of the Mosgiel Woollen Factory Company (Limited), and find that the above balance sheet correctly represents the position of the company's affairs as at the 6th October 1886. The stock lists bear the usual certificates of the manager and accountant as to quantities, values and calculations, and have been accepted accordingly.

William Brown J A ■~, Walter Hislop j AmJltorsThe Cbaibman, in moving the adoption of tho report, referred to the great loss the company had sustained during the year by the death of Mr Robert Gillies. He was very well known to the shareholders, and his advice was ever valued by the directors. The deep intesest he took in the affairs of the company were a very great source of comfort and strength to them. His loss was very materially felt, and the directors could only express their sincere regret at his somewhat untimely death. The statement of affairs which had been presented to the shareholders at first sight did not appear to compare favourably with the reports of previous years. At first sight it appeared that the result of the year's work had been by no means so satisfactory as the previous year. In a certain sense this was true. The year's operations to all intents and purposes resulted in a loss of about £1000 in bad debts. The actual bad debts, however, amounted to something like £12 19s 7d; but the directors had information from Auckland that one of their largest customers bad stopped pay. ment; so that there would be another loss of about £850. Ample provision bad been made for this debt, but whether there were any more things like that in store remained to be seen. The liability to the bank had been increased during the year to the extent of nearly £7000. On that point be desired to make a little explanation with a view of putting before the shareholders the actual cause of this increased liability. He might say that during the year the sales of the company had been about £6000 short of what, they were the previous year. That might be accounted for to a large extent by the fact that some months before the books closed in October last sales became impossible except at a ruinous sacrifice in prices, owing to the alteration in the woollen market. The company therefore, instead of sacrificing their goods and forcing them in the market, preferred to wait till they felt certain of an increased value in the I price of wool, which would necessitate an increased value in the price of goods. It was thought better to keep good stock than sell at unproductive prices, with the risk of making bad debts. There had also been an increased liability in another direction, as during the year something like £3200 had been added to the plant account. There was an item pf £153 re? presenting unpaid dividends on the balance sheet. These dividends had been outstanding years and years, and were only an encumbrance on the books; so that it was thought necessary that they should he forfeited. Last meeting of shareholders he (the chairman) intimated that the directors had committed themselves to the introduction of the electric light into the factory. He expected the cost would be about £900, but the = actual cost bad been £860. The light bad hee» of very considerable benefit. It gave a very much bitter light than the ordinary kerosene they had been using, and.was better and cleamr in every way. With regard to the prospects of the company, he did not think there was any reason at all for alarm or apprehension as. to, any severe struggle coming on. At the same time they could not shut their eyes to tba fact that competition was getting very severe. There were already a number of mills in the colony, and others were in course of erection, so that '■ompetition was bout d to be pretty keen. However, as te hadalwayi pointed out, the ampU allowances, for depreciation which had been made placed the company In a pigsty ion mo<s tlpn equal Ip c< mpete .'with new 'mills. The.Mdf-giel CYrjopa'hy had spent not less than £105,000, and £7Cf,uUO had beep, spent in plant alone. He had hot the slightest doubt that the company would exist fairly well, but he would like to indicate what the "Breofrrs were prep'arc4

to do in tho event of it being desirable. Seeing tho ample provision that had been mado for depreciation, they thought they would bo justified in appropriating suras from tho reserve fund in future for depreciation — writing I down tho reserve fund and securing a reduction of tho plant account in that way. They were content to work for £2000 less profit and to pay a 10 par cent, dividend. Somo shareholders went the length of saying that tho reserve fund ought to be absorbed nt once, so as not to pay thu property tax on it. The directors were not prepared with any resolution about that.butwere ready to have tho matter discussed with a view of seeing what it would bo advisable to do. He might mention that the dividends that had bet>u paid by tho company amounted to tho by no means very small sum of £51,500, Bnd although thero had been n decreaso iv the sales of the company of £6000 wheu compared with last year, the sales were only £1500 below the average of the last four years. Ho might also stato that in making up the stock lists and value _of the goods in process and of the raw material on hand no allowance whatever had been mado for the in-

I creased value of the wool—for its present valuo above what it had cost. As shareholders were aware, wool was bought last year on unusually low terms, and tho price it had cost the company had been taken forward, so that no appreciation of valuo had been counted. Had tho directors thought fit, they would have been (Juite justified in talcing credit for tho advanced price of tha wool, especially as last year, when wool had fallen, they wrote off 3d per lb for depreciation iv value. All tho gooda in stock, in process of manufacture, nnd tho raw material had been taken at the minimum value; so that everything had been taken at what to his mind was a perfectly safe and therefore satisfactory valuo. The chairman concluded by moving the adoption of the report and balance sheet.

Mr A. J. Burks said ho had very great pleasure in seconding the adoption of the report. He would not say a single word about the state of the company, because the chairman had given the iuformation far better than he could, but ho desired to say that he cordially endorsed every word the chairman had said, and agreed with everything the directors had done. He would like, however, to be permitted to say a few words about some things connected with tho company's works. The magnificent steam engine that had been placed iv the mill was the product of what was called local industry, and it was a piece of machinery a credit to the maker and a satisfaction to the company. One only required a cursory knowledge of the subject to see at once that it was a really firßt-class article. Every part of this engine had been made in Otago with one exception, and that was the piston springs, which were a patent. The main shaft was the biggest ever constructed in this island. It had taken no less than seven tons of old horseshoes and five or Bix tons of other scraps to make it, and the contractor had not a hammer big enough for it, and so this part of the work was done by him with the great steam hammer at Port Chalmers. They had reason to be proud of this engine. Bets had been taken that it would never start, but it went away without a hitch, and was now driving an electric dynamo without causing a flicker on the electric light—one of the most severe tests it was possible to submit such machinery to. He might mention that the fly-wheel of the engine alone weighed 10 tons, so some idea might be formed of its size. Everybody probably knew that he had a weakness for local industry, and therefore

it was with pleasure and pride that he spoko of this instance of its success, and he might add that tho engine stood there at a cheaper rate than they could have got it f.o.b. in Glasgow. The new plant for making hosiery was also very beautiful, and its rate of speed was in marked contrast to the old jog-trot pace of the old machines.

Mr W. Langlands wished to make some remarks on the balance sheet. Ho was glad to hear the chairman indicate that next year the board would piobably apply the reserve fund towards writing off from the plant and landed property accounts by way of depreciation. He would go further than that, and advocate that they should at once write down these accounts by a large amount and take from the reserve fund for that purpose. The present circumstances of the colony were suoh that that course was in his opinion warranted. Factories were being started on every hand with plant comprising the most receut improvements, obtained at the lowest possible rate. It had been stated by the chairman that it would cost probably £100,000 to start a company similar to the Mosgiel Company: He questioned that, and thought it would not cost anything like that sum, and in that opinion he was supported by men possessing considerable knowledge of such matters. At the present time the sum total of the plant, warehouse property apd land, including electric lighting, Kaikorai machinery and all, was £60,692. He thought they should at once proceed to reduce that by 20 per cent, and should write it off the reserve! fund. Mr Roberts remarked that what he said was that it would take £100,000 to Btart a companyin a position similar to what the Mosgiel Company now occupied, and that position included the possession of stock and wool to the value of £35,000. MrLANGLAKDSrepIied that that was altogether a different thing. He wasreferring now merely to the plant, the land, and warehouse property. He thought that £4500 was a great deal too high for the warehouse property, and that the valuation of the land in the Taieri was also excessive. These properties had suffered in the general fall of landed property, and the wisest thing for the shareholders to do was to suggest to the directors that they write off £12,000 from tho reserve fund and apply it to the reduction of the plant, warehouse, and landed property of the company proportionally tq the amount of each. There would then remain for the, purpose of meeting the depreciation in future £7000 so that the view of the directors with regard to writing off depreciation from the reserve fund, could be carried out next year. If this reduction in the value of the assets was unwarranted the company would avoid paying a very large amount of property tax. The property tax now amounted to £61 6a 6d per year, and he feared that next year the amount of the tax would be increased, and he would not be surprised to see it 2d in the pound, in which case the company would have !to pay over £200 as property tax. .As an amendment he would move—" That the report be adopted, and that £12,000 be withdrawn from the reserve fund and written off proportionately from tho plant, warehouse, and landed property of the company." The Chairman suggested that the £12,000 should be written off the plant only. Mr Langlands was willing to adopt the suggestion. He would be satisfied so long as the amount was applied in the direction of reducing the sum at which the company's assets were valued. The amendment was altered accordingly. Mr P. Dey did not think any shareholder would second the amendment, for it was top sweeping altogether. He thought the directors i had put their views very plainly before the meeting, and that they were far more likely than the amendment to meet the views of the shareholders. If it could be done, he thought it would be better to apply the reserve fund to paying off the Colonial Bank of New Zealand, and wiping off the overdraft. Mr Lanqlands: The reserve fund is not money; it is property.

Mr Dey thought the course suggested by the chairman would meet with the approval of the whole of the shareholders. He thought they should now accept the 10 per cent, dividend, but that the shareholders should be well content with a dividend of 8 per cent. As the chairman had pointed out competition was rising on all hands, and no doubt profits must lessen, and perhaps the risk of bad debts increase. Thero was no doubt the company was in good hands, and they had been fortunate in their customers, with the exception of one instance in Auckland. He hoped the report and balance sheet would be adopted without amendment, and that if necessary the reserve fund would be applied in the manner suggested. There was uot, he thought, much reason to fear that a property tax of two pence would be imposed. Mr W. Scoclae seconded the amendment.

Mr W. D. Stewart thought the proposal was somewhat too radical, and said he would prefer

it if the proposal were made in the way of a suggestion for the consideration of the directors. He doubted very much the propriety of writing off so large a sum even from the plant. They could not disguise from themselves the fact that the competition that was rising would have a prejudicial effect. Even though many of the companies might be unsuccessful, the effect of the starting of the mills would be to throw upon the market possibly a large quantity of comparatively inferior goods, which would be sold at low rates and thus damage trade, Ho did not take so sanguine a view as the chairman did of the prospects of the company, and thought that very likely Mr Dey was right in saying . that they would have to submit to a diminution of the dividend. He was quite satisfied, however, that under its present^nanagement the company would hoH its own in the face of all possible competition. The company was in excellent hands, and the lines laid down by the chairman were safe and must commend themselves to the judgment of the shareholders. He did not feel justified in supporting Mr Langland's proposal, and was of opinion it would be better to adopt the course suggested by the chairman. The Hon. Mathew Holmes thought the shareholders ought to be very satisfied with the result of last year's operations. None of the companies entering into competition with the Mosgiel Company could do so on better terms. The whole concern was in the very best possible condition. Nothing could exceed the machinery in point of quality, whether in England or in Scotland. Mr Langlands had failed to convince him that there was an over-estimate on the plant or the property or anything submitted to the meeting. He therefore could see no reason whatever why Mr Langlands should move an amendment to the resolution.

Mr Hallenstein supported tho adoption of the report. Some three years ago he mentioned that he thought it would be wise, in face of the severe competition, not to pay a higher dividend than 8 per cent, until the plant had been written down to about one half of what it stood at theu, and ho thought it was more neeossary now that it should be written off than beforo. There was no doubt that the company had kept it down, but they do not shut their eyes to the fact that a great many other mills wore going up, and notwithstanding what Jtfr Holmes had sajd, that ihe IJosgiel mill was of batter yalue than ot(ier mills, he wns in a position to state that other mills had hi en sold for one-half of their original cost. He would suggest to the directors.that they should reducthe dividend to 8 per cent, until the p^ant wa i written off.

The Chairman had no desire to force a J,Q per

cent, dividend on the feharvhuldera. Tha directors felt that they were justified in declaring that dividend no long as tho position of the company would warrant it. Some elmreliolderß thought they had been stretching a point to pay a 10 per cent, dividend, but tho directors would not admit that at all. During the last iivo yrnrs they had boon paying such a dividend, but they have paid moro. Speaking for himself, ho hud always been of opinion that 10 per cent, was the maximum dividend that should be (mid. Mr IiUHNS ™irt ho would lilte to inform Mr Langlands that tho same (juestion« had been fully dobated hy the directors, and ho held very much the same views as that gentleman until

wiser counsels prevailed

Mr Lakcilands was glad to find Mr Hallenstein had supported his friend in writing down

the plant some two or three years ago. No one was better able to judge of ths necessity of that than Mr Hallenstein. Since hearing his statement he was glad to bolievo that £12,000 was not enough to write off. What was the use of the company continuing to pay the property tax? It soemod mere folly. He trusted the meeting would support the proposal he had made.

Mr Robsbts said as a matter of fact the plant had been written down more than onehalf.

The amondment was then putto tho meeting .mil lost, and the motion for the adoption of the report was subsequently carried. Mr B. Ewinq usked what amount had been paid in directors' fees, and whether tho feefl had been increased lately.

The Chaieman said he could not give the oxact amount without going to the books of the company. The directors met onco a fortuight, and the fees up to this time last year wera one guiuea a meeting, but since then they were two guineas. As chairman he received 100 guineas, but the other directors got two guineas for each meeting.

Mr P. Dky thought that in view of the depressed times the directors ought to go back to tho old fee.

The Chairman said the directors had for many years past raised the point that the fees were not commensurate with the amount of trouble the discharge of their duties involved. In all matters that camo before the board there were diversities of opinion, but it was not for him to say what the diversity of opinion was respecting this matter. Mr Lanqlands did cot express any opinion as to the amount of the fee, but asked what authority there was for fixing it.

The Chairman replied that the 53rd clause of the articles of association provided that the remuneration of the directors should be determined by themselves.

Mr B. Hallenstejn thought that any company that could pay a dividend of 8 or 10 per cent, must have good manngement, and that the directors deserved their fees.

The subject was then allowed to drop. ELECTION OP DIRECTOBS, ETC.

The Hon. Mathow Holmes and Dr Hislop were unaminously re-elected directors, and Messrs Win. Brown and Walter Hislop were reappointed auditors.

Mr W. D. Stewart, M.H.B. proposed a vote of thanks to the directors and officers of the company, which was seconded and carried nem. con.

The Chairman returned thanks on behalf of tho directors. During the past few years the position of a director of the company had been one of pleasure, but he did not think that for the next few years it would be a bed of roses. They might safely look forward to having their work cut out, and he hoped they would be able to steer the company as successfully in the future as they had done in tho past. Thero was no doubt the directors had to a large extent to depend upon the heads of departments—upon the town and mill managers and the heads at the factory; but the equipment of the company in these departments was favourable, the business being conducted comfortably and well.

Mr MoimisoN, on behalf of tho members of the company, acknowledged with pleasure the compliment expressed in the vote of thanks. He might say that tho employes of the Mosgiel Company had all along been proud of their connection with the company, and desired to put their name to their work in every sense of the word. Each and all of them desired to make a good, sound, honest article, that could go anywhere without fear of comparison, and to this he believed was due a considerable part of the success the company had achieved up to tha present time. They would, he was confident, continue to do the same, trusting to industry and reliability gaining for them the same good name in the future as it had secured in the past. :. , . . .

This concluded the business.