KEMPTHORNE, PROSSER, AND COMPANY

Otago Daily Times, Issue 21601, 23 March 1932, Page 12

KEMPTHORNE, PROSSER, AND COMPANY

annual meeting Tlie fifty-third annual meeting; of shareholders in Messrs Kempthorne, Prosser, and Co.'s New Zealand Drug Company was held in the Somerset Lounge ; yesterday afternoon. The chairman of directors (Mr W. F. Edmond) presided, and there was a good attendance of shareholders. CHAIRMAN’S ADDRESS. In moving the adoption of the annual report and balance sheet, the chairman said:— „ . M “ Before dealing with the figures giving the result of trading dufitig the past year, I desire to Cypress the pleasure of your directors at again meeting shareholders in general meeting and presenting a statement of last year’s operations as outlined in the balance sheet of January 30, 1932, already In,your hands. On the last occasion 1 addressed you from this chair a year ago a hope was expressed that before the next annual meeting a much-longed-for improvement in ( tbe world's depression would be apparent, cut, unfortunately, this baa not been realised to the extent anticipated, The present is not a time to inflict on shareholders a detailed account of.the difficult nature of trading, covering the year’s operations at the company’s drug Warehouses and fertiliser Works, blit I feel sure you will be interested in some of the outstanding features that Caused your directors and the management much concern. " Our company draws its warehouse stocks principally from the United Kingdom, also to a much lesser extent from Continental countries and the United States of America, Further Customs duties were levied on goods from me Continent and the United States of America in July last, and in September Britain departed from the gold standard, causing a serious decline In the value of sterling in many markets. As an example, sterling in terms of French and American currency fell, the drop varying from 2o to 39 per cent., and even somewhat higher, thereby sharply appreciating the purchase price of goods from the countries named. In addition, Customs duty had to be added on to the much higher home consumption values so that great caution had to be exercised in purchasing even minimum requirements. You will readily understand, with the value of sterling varying day by day in foreign currencies, how uncertain trading became under these unstable conditions. . Notwithstanding this adverse position, I am pleased to inform you that by careful indenting all the warehouses of the Company have been kept well supEliod with goods throughout the year, and avO always been in a position adequately to meet the demands of clients. t “ Begarding the chemical fertiliser section of the company’s activities, out works continue to produce manufactures of Very high standard, They are controlled by officers of proved efficiency, with the result that operations at all points were maintained through the year to the entire satisfaction of your board, Competition has been very keen, but it affords me pleasure to state that the works of the company were able to secure a satisfactory share of all business offering, “ In the month of October last the Government for the purpose of increasing the the use of superphosphate granted a-sub-sidy to all manufacturers of Us per ton. whieh.is now allowed on all sales and will continue to June 30 next. It is hoped that this subsidy will be extended by the Government for another period, The effect of the subsidy has been greatly to increase the sale of superphosphate, and this larger use will certainly be reflected in improved volume of farm production, “ Sulphur and nitrate of soda are used in large tonnage at all the works of the company for the manufacture of sulphuric acid and superphosphate. Both these materials appreciated in price due to the lower value of sterling, but fortunately good Stocks purchased before the advance were held at all works.

“ The trading outlook for the present year is certainly somewhat obscure. There are decided indications of improvement in the Old Country, which is a hopful sign. Meantime it is necessary that the greatest economy be practised covering Government departments, trading concerns, and other general expenditure, so as to bring as far as is possible the outgoings of the Dominion within reasonable proportion to the incomings. I will now briefly review the figures of the balance sheet. LIABILITIES.

“ Capital paid tip, 1583,000, remains unchanged. “General reserve, £IIO,OOO, also stands at the same figure as appeared in our last accounts. By adding to this the amount of undivided profits as shown in the carry-forward, we have a sum of £140,920 in reserve, This you will, no doubt, agree may be regarded as indicating a strong position, “ Reserve on book debts, £5360, It is intended that this account should represent a reserve of approximately 5 per cent, on the outstanding customers’ balances at the closing of the books. Owing to a greater volume of business in January month, the book debts are somewhat greater. It is, however, not considered necessary to increase this reserve, the amount of same being ample. “ Sundry creditors, bills payable, £157,271, show a reduction of £9047, compared with last year’s figures. This group of accounts Is naturally subject to change from year to year, as it represents amounts credited for goods received prior to the closing of the books, also_ other liabilities, Including provision for income tax payable on the profits of the present ** ASSETS.

“The stocks of material at all points show a reduction of £6884, the total stocks amounting to £295,221, These stocks are, of course, distributed over our four fertiliser works, four warehouses and pharmaceutical factory. With changing currency conversions, fluctuating exchange and other unstable factors, the process of listing and valuing stocks was made decidedly difficult, but I can assure you that the company’s stocks throughout the Dominion have been taken and checked with greatest care so us to arrive at correct values, full depreciation having been made as considered necessary. "Land Buildings, and Plant.-—Addi-tions at our Westfield works, Auckland, are mainly responsible for the increase shown of £3961, so that after taking into account the appropriation Of £24,500 for depreciation of these assets the net book value of all our properties stands at £431,767. Shareholders will note that the depreciation provided is 5,36 per cent, on these fixed assets, which is considered by your directors as amply sufficient. I have pleasure in Stating that atf buildings, plant and machinery have been maintained in excellent order., ell necessary repairs having been closely attended to throughout the year. ... “Book dpbtg and bills receivable taken together stand at £120,580, and are greater than the figures in last year’s balance sheet by £11,500, this increase arising through a somewhat larger turnover at the close of the year mainly in fertilisers at the company’s North Island works and due to the subsidy payment to which I have bcfoie referred. All accounts on the books have been closely scrutinised, and a full allowance made for all bad and doubtful debts. “ Sundry debtors and other accounts call for no particular comment beyond the fact that these entries mainly represent debtor balances covering telegraphic transfers for overseas shipments made in the closing month of the balancing periqd. The figures arc almost identical with those of last year, . “ Shares in Agricultural Lime Company, Limited, 2230. This is a new account on the books and represents calls paid on 15,000 £1 shares in the company named. It is proposed that not more than £7600 shall bo called up. These lime works are situated at Te Kmti, North Island. A complete, new and up-to-date plant has been installed during the year and is now working satisfactorily. An immense volume of limestone is available, of high quality and easily worked. These lime works will prove of great value as an adjunct to our North Island fertiliser interests with which they will work hand in hand, stimulating the sale of superphosphate and other manures. PROFIT AND LOSS ACCOUNT. “ Coming to the profit and loss account, it will be noted that the gross profit shown is £145,368, and that there is a marked decrease of £32,615 compared with the previous year. The main reason for this lies in the reduction in turnover due to the lower purchasing power of the community. This, of course, _ is unfortunate, but not surprising, having regard to all the circumstances. Although gross profit is lower, it will be seen that a counter-balance has been effected in a reduction of profit and loss charges of £18,891. Application of tho economy cut in June last assisted materially, as it was applied to all employees and salaried

officers including general manager and Board of Directors; also I wish to adyis* you that general expenses of all kinds throughout the year were most carefully supervised, the net result being the considerable reduction shown. The ratio of these charges to gross profit is 66.27 per cent,, whereas in the year previous it was 64.74 per cent. The difference is not great when the trading position of last year is taken into eon/ideration. “A net profit of £49,052 is the final result of the year’s work, to which, of course, has to be added the balance brought forward from last year, £28,099, out of which an interim dividend pt 34 per cent, for the half-year to July 31 was paid, amounting to £20,405. \ve therefore have to deal with at this meeting the sum of £50,740 18s Bd, ■which youiboard recommends should be applied aS follows: —To pay a final dividend of 4 per cent., making 74 per cent, for the year, £23,320; to contribute to the Staff Provident Fund, £2300;, and to carry forward to next year £39.926 18s Bd. “ The Staff Provident Fund continues to grow in strength, and has on many occasions proved of immense worth to membore of the Staff, providing well-deserved assistance on retirement through advancing years, and in other cases. Your board therefore recommends the contribution ot £2500 with great pleasure, feeling that it has the full approval of shareholders in its action, • •’ h “ I am sure you will agree that the work of the staff should not remain unnoticed, so that before closing my short review on a very difficult and oridrmia years work it affords me much gratification to place on record the directors full appreciation of the excellent services rendered by the staff, to Which I am eUre shareholders would wish to add their thanks. —(Applause,) • . Mr G. Crow said he had great pleasure in seconding the motion and in congratulating their chairman on his .able and comprehensive report. He rather thought thfil Mr Edmond had been wise in not enlarging on the difficulty features of the year’s operations. Unfortunately, the difficulties of trading at the present time were a subject they' were all familiar with. Nevertheless, in the face of falling prices arid restricted purchasing power it must be very satisfactory to shareholders to realise how well_ their company had maintained its position, Ihe balance sheet showed their Company to be in a very sound position, and he was sure that there had been very prudent and careful management. The speaker referred to certain details of the balance Sheet, and said that many large concerns like theirs were not doing more than holding their own, and it spoke volumes for their management that the company was not only able to pay dividends, but also to contribute such a large amount to the staff provident fund and carry forward a sum of nearly £31,009,— (Applause.) The motion was then put and earned. DIRECTOKS. The retiring directors—Messrs F. W, Mitchell and W, O. M'Kellar—were reMr Mitchell, in returning thanks, said that the aim of their company was to manufacture superphosphate, etc., of the very highest quality, and during the past year that necessity had been Oven greater possibly than in previous years. By keeping Up the high standard of quality of their output they Were best able to meet any competition that might arise.— (Applause.) ■■ . Mr M'Kellar said that the company had passed through an anxious year. Perhaps some of their shareholders did not fully fealise how closely the fortunes of their company were bound up with the fortunes of the farmers- New Zealand was essentially a primary producing country, and must always remain so—the men on , the land were their customers for the most important article they manufactured —i,o., artificial manures. If the farmers were doing well the company would also do well. For the .past two years all farmers had had a great struggle to make ends meet—they bad been forced by circumstances to cut down their requirements of manures to an absolute mini: 'mum, which, meant decreased sales for the company. When things would right themselves no one: could say, but, without wishing to express undue optimism, he thought it could be said that there were now some small signs of daylight ahead. Great Britain was, of course, their primary producers’ best customer, and Unless their cables were misleading them there was distinct evidence of a trade revival in that country. Once it was an accomplished fact, the purchasing power of the people would increase and they would be able to pay better prices prices for their produce, and this would very qliickly be reflected but here.? Their farmers would be in a position once more to buy freely from the company and continue the much-to-be-dcsired development of the country—development which had had a severe setback during the past two years. Meantime, all they could do was to go along prudently and look forward with hope to such a,.happening.— (Applause,) ,■ AUDITORS. The following auditors were re-ap-pointed:—Messrs William Brown and Co., Dunedin; Mr G. C. W. Morris, Auckland; Messrs W. E, Best and Wilkinson, phrist r church; Mr George F. Judd, Wellingtons Mr T, Ballingall. Wanganui. VOTES OF THANKS. Mr P. L. Ritchie moved a hearty vote of thanks to the directors, the general manager,' and the staffs for excellent work done during the year. It had been a very strenuous year, he said, and their staffs and directors had carried out their duties in a very capable manner. —(Applause.) . . Mr Harry Goughian seconded the motion, which was carried by acclamation: Mr Edmond returned thanks on behalf of the directors. He said it was very pleasing to know that they retained the confidence of shareholders and that their efforts were appreciated. They could rest assured that the board would do its very utmost in the interests of the company—(Applause,) Mr W. Taylor, general manager, who was received with applause, said it had been bis privilege and pleasure to respond for many years to votes of thanks passed by the shareholders, and he again thanked them, The year, as had been, voiced by their chairman, had been a distinctly bard one. There had been many difficult problems to solve and much strenuous work. He could assure, them, however, that the problems and the work had been met with the aid of a very able and ioyal staff. He would taka great pleasure in conveying the shareholders’ vote of thanks to the staff and he was sure it would be muen appreciated.—(Applause.)