MOSGIEL WOOLLEN FACTORY COMPANY.

Otago Daily Times, Issue 7723, 18 November 1886, Page 4

MOSGIEL WOOLLEN FACTORY COMPANY.

We have been requested by the chairman of the Mosgiel Woollen Factory Company to republish more fully the following portion of hia speech at. the annual meeting held on Tuesday:—

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 showed a profit of about the same as the previous year, and in [ comparing the two years shareholders should not lose sight of tbe balance of some £1650 which was carried iorward from the profit and loss account of 18f4 to the year 1885 as compared with only £59 carried forward this year. Besides this the provision which it has been necessary to make for contingent losses (£1000) cuts into the net result of the year to a considerable extent. The actual bad debts, however, amounted to something like £12 19s 7d. The provision of £1000 to provide for contingent losses has proved to be ample, as it is ascertained since the books were closed 'that the ! actual loss will only be £850. It remains to be seen whether there are any more large losses to face, but he hoped that such a possibility would be avoided. The liability to the bank had been increased during the year to the extent of nearly dt7ooo. On that point he desired to make a little explanation with a view of putting before the shareholders the aotnal cause of this increased liability. He might say that duririg 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 fluctuation of the price of wool demoralising trade in the products of the company. The company therefore, instead of sacrificing their goods and forciDg .them in the market, preferred to wait, as the increased value in the price of wool 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 •omething like £3200 had been added to the plant account. There was an item of £153 representing unpaid dividends on the balance sheet. These dividends had been outstanding years and years, and were only an encumbrance on the books; so he desired to intimate that the directors would forfeit some of the older outstanding ones if they were not claimed at once. 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 had been £860. The light had been of very considerable benefit. It gave a very i much better light than the ordinary kerosene they had been using, and was better and cleaner 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 the fact that competition was Bett'ng very severe. There were already a number of mills in the colony, and others were in course of erection, so that competition was bound to be pretty keen. However, as he had always pointed out, the ample allowances for depreciation which had been made placed the company in a pos: tion more than equal to compete with new mills. The Mosgiel Company had spent not less than £105,000 in the equipment of 'the mill, and £76,000 had been spent in plant and buildings alone. He had not the slightest doubt that the company would exist fairly well, but he would like to indicate what the directrrs were prepared to do in the event of it being necessary. Seeing the ample provision that had been made for depreciation up to the present time, they thought they would be justified in appropriating sums from the reserve fund for a year or two for depreciation—writing down the reserve fund and securing a reduction of the plant aocount in that way. They would in this way be able to work for £2000 less profit and still pay a 10 per cent, dividend.