DOMINION RUBBER COMPANY

Otago Daily Times, Issue 16977, 13 April 1917, Page 2

DOMINION RUBBER COMPANY

ANNUAL MEETING.

Tno ninth general mooting of shareholders in the Dominion Rubber Company (LUI.) was held in the board room, Mow 'Zealand Express Company's building, lost night. Mr W. L. Simpson (chairman of directors) presided, and all the other directors were presont —Messrs Hugh Adn.ni, Alfred Anderson, F. W.. Mitchell, and Thomas Glcndining— besidee about 20 other shareholders.

Tho annual report was as follows:—Tho directors submit accounts for the year ended November 30, 1916. Tho profit for the year, after making provision for accrued income tax as estimated, amounted to £4582 16s 7d; to -which must be added the amount authorised to bo carried forward, £1033 Is 6d;—total, £5615 18s Id. The interim dividend in October last absorbed £2500, and tho directors now recommend payment of a further amount of 5 per cent, £2500, and that there be carried forward the sum of £615 18s Id;—total, £5615 18s Id. It will be noted that tho provision for income j tax involves a large sum, accounted for by tho fact that tho company being; in a state of development, and having only made its lirst profit of any eize during 1915, was without such a "standard income" as would ensure an equitable assessment. It is impossible to eay what tho tax will be next year, but provision to meet it has been made upon tho basis of last year's assessment. Tho development of the estate has now reached a stage at which it is deemed desirable to debit the whole of the Kelantan general charges to profit and loss. Tho total rubber harvested during the year was 202,0001b, or slightly over the estimate, working out at an average of about 4001b per acre, which is considered very satisfactory. Tho present year began badly owing to adverse weather conditions, and as few new trees will bo tapping until block No. 7 is ready, any estimate of the yield for tho current 12 months must be of a conservative nature —say, 240,0001b. Block No. 7, of 170 acres, planted in January, 1914, is likely to be under tho knife towards the end of 1917. and ho well under tapping in 1918. Block No. 8. comprising 85 acres, has been planted, and the young trees are reported to bo coming away splendidly. Tho clearing of a. further area of 115 acres was recently authorised. The total area at present planted is 785 acres, and tapping is proceeding over 530 acres. Nothing has been done regarding the erection of the permanent factory referred to from time to time, nor is it likely that the matter ; will be further considered during tho continuance of the war. Advices have been received to the effect that the Government has extended the time during which indentured Chinese coolies may bo secured, and this decision will relievo tho labour difficulty for the time being." Tho Chairman, in moving tho adoption of the report and balance sheet, referred to the return the management had mado from the company's plantation for tho year. The shareholders had every reason to be satisfied with tho management which has produced them. The output for the year was estimated to produce 200,0001b of rubber, and tho return showed it to bo 202,0001b. Speaking of tho output, the manager, in his report, remarked: " Wintering was more severe than usual, and, as a result, tho output fell away badly in February, March, and April of 1916, while in November the heavy rainfall caused a fall in tho output for that month of 5000 to 6000 pounds of rubber." With ordinary luck, he added, tho estimated output for 1916 would have been exceeded by many thousands of pounds. The average price obtained for tho above output works out at 2s per lb for all grades, which was all sold in the Singapore market, where the Dominion Company's rubber had made a name for itself, and was keenly contested for by buyers, and the management studied to maintain the high standard it has reached by careful preparation. Besides, tho Singapore market had greatly increased in popularity with buyers and sellers, and many planters who used to sell their rubber in London now preferred to sell in Singapore. Owing to the high freights prevailing, tho London equivalent now ran only 3£d per lb above Singapore. In his report, the manager stated that throughout ho year only "two grades of rubber have been turned out and the lower grade brings in a really i wonderful price seeing that it is mainly composed of rubber from bark shavings." Hβ attributed the good price obtained to the thorough and excellent machining it got at the company's factory. Speaking of tho yield per acre, the manager reported that the area he was now tapping over was 530 acres out of a total area in bearing of 800 acres; but all of this was not under tho knife until towards the end of the year. But, taking it at 505 acres as the average for the year under the knife, it gave an output of 202,0001b, which was equal to 4001b per acre per year, and that, according to the manager, would bs quite a safe and fair calculation, and promised well for tho future of the plantation. According to tho reports of the outputs of other plantations, 4001b per acre per annum ranked as a largo return. The manager, in his report, put the true all-in cost exclusive of New Zealand charges, at Is Ogd, while the secretary puts the true all-in cost, including Dunedin charges and the depreciation, at Is 32d, exclusive, of course, of the provision which had to bo' made for the income tax and excess profits, so that tho returns from the plantation might bo considered very satisfactory but for the taxation. The Chairman also spoke of the recent taxation imposed by tho New Zealand Legislature, following the Imperial Parliament, on industries and styled "excess profits tax," and the effect tho incidence thereof had had on tho profits of the company's rubber plantation, an industry carried on in a part of tho British Empire in no way subject to Now Zealand; but the company, being registered in New Zealand, became subject to its laws. That the taxation on businesses and industries had become imminently necessary, no one except an insane pacifist would dispute, and like all other industries the rubber industry was bound to contribute. It was not,- therefore, to the tax as a tax that this company took exception, but to tho inequitable effect the incidence of the taxation had on the rubber plantations, according to the stages of development they had reached. There were only two small rubber companies registered in New Zealand affected by tho incidence of the excess profits tax. Both of these wore young companies, tho one in the ninth year and the other in tho seventh year of its existence, neither of them having reached the stage 'tfhen their standard income could bo ascertained by any of tho first three modes prescribed by the 11th section of the Finance Act. That being so, the same section provided a fourth mode—viz., by arbitrarily fixing a percentage datum line of 7a per cent, of the amount of the capital employed by the taxpayer in the production of his income at April 1, 1915, with such additional sum for expenses of management, not exceeding £600, as the commissioner might doom just. But the commissioner had not adopted' the fourth mode, prescribed by section 2 of the Act. He must, therefore, have resorted to the discretionary power given him by Clause 19 of tho Finance Act, and become satisfied that the company's case was ono that tho computation of' its standard income in tho manner prescribed by the 11th section of tho Act would entail serious hardship on tho taxpayer [the company) by reason of the recent commencement of the business of such taxpayer. In other words ho seemed to have become satisfied that tho company could not be considered to have commenced , its business so Jar as an assessable income was concerned until the trees in its plantation became productive, and that, therefore, the computation of the standard income in the manner prescribed by section 11 of the Act would entail serious hardship. In such circumstances, by the 19th section of the Act, the commissioner might compute the standard income in snch manner as, having regard to all tho circumstances of the ease, ho deemed just and reasonable. In exercise of this power tho commissioner fixed the datum line for the computation of tho excess profits tax at 10 per cent, on tho amount of capital employed by the company in tho production of its income, with the result that the company had to pay a sum almost equal to half its total profit, and this, the commissioner considered was giving i-eliof to the serious hardship that would be entailed on the company if he computrr! the standard income under the 11th sot-Jon of the Act, the difference being 2i per cent. This could not bo termed liberal, and was quite inconsistent with tho term "serious hardship." At the same time the commissioner intimated: that, as his decision was given in exercise of the discretionary power given him by tho Act, there was no appeal from it.

Mr M. S. Holmes seconded the motion. He said that, <;s tho result of the year's working they kid their 10 per cent., 'wliir.b was tho same as last. year, and were carrying forward £615, which was as much as they required, it seemed to him thru shareholder ought to bo quite satisfied, considering ''V they had gone through. Tho chuirn:r-. had spoken about the excess profits tax. It. was a tax they had to pay. and tl.'iic was all about, it. Every company was in the same position, and must pay the tax so long as tho war v.-ent on. and perhap-, longer. Ho considered that shareholders out to be proud that '.hey wore •ible to pay so vr.neh towards tho expenses of carrying on the war.

Mr IC. R. Smith asked what w;is the amount paid out for taxation in tho pciiod covered by the balance sheet. • Tho Secretary (Mr A. Johnston C. Brown) said that provision was nude in tho haliinco sheet for £1339 for last voar and tor £4000 ,ip to date. 'J lie Chairman called attention to tho item in tho balance sheet: "Provision for income tux (iiseeitained to 30th November, 1915. and estimated to 30th November, 1S16), £5339 2s Ad"

The motion for tho adoption of the report and balance sheet was carried. Messrs A. Anderson and Y. W. Mitchell were re-elected directors, and Mr D. Crawlord was j-o-eleeted auditor. •

■ilr J. C. Stephens, moved a vote of thanks to tho Messrs Bell for their continued good management of the company's business. Tho company was in a sound position, and they owed that largely to the ablo services of tho manager. Mr A. E. Jenkins seconded tho motion, which w;is carried with applause.