NEW ZEALAND BREWERIES

Otago Daily Times, Issue 23527, 16 June 1938, Page 7

NEW ZEALAND BREWERIES

EXPANSION OF BUSINESS YEAR’S OUTPUT A RECORD DIFFICULT TRADING CONDITIONS (Per United Press Association) WELLINGTON. June 15. “ The company has shared in the general prosperity experienced throughout the Dominion, and. aided by favourable seasonal conditions, we are able to record the highest yearly output since the company was formed, said Mr D. W Madden chairman and managing director, at the fifteenth annual meeting of shareholders of New Zealand Breweries. Ltd., to-day ‘ This must be considered satisfactory particularly in view of the keen competition throughout the year.” The company’s trading had been carried out under exacting conditions, the chairman said. There had been heavy advances in the prices of all raw materials, and in operating and labour costs and charges generally, and there was evidence in this respect that the limit had not yet been reached Last year the directors had indicated the necessity for conserving and expanding the company’s trade by making investments in hotel properties by way of purchase and otherwise This policy had been continued to a degree and included in the purchases were the hotel properties formerly owned byMessrs J, Staples and Co.. Ltd Issue of New Capital Referring to the offer of new capital made during the year, the chairman said the offer in terms of the Articles of Association of the company was confined in the first place to existing shareholders. Out of 546,135 shares offered. 543,108 shares, equal to 99.45 per cent., were taken up at a premium of 5s a share. The directors had decided not to issue the small number of 3027 shares not applied for The success of the new issue could be regarded as most satisfactory ana -as a reflection of the shareholders’ confidence in the stability of the company and the policy of the. directors. The proceeds of the new capital issue had been absorbed and were employed in the company’s business to cope with the demands on the company’s manufacturing facilities and to provide for necessary additions and alterations to both premises and plant, some of which had been left in abeyance during the difficult years. Mr Madden said that substantial expenditure had been incurred at the various breweries and bottlin^-houses and the complete rebuilding of Speight’s Brewery was now well in hand. The Hotel Waterloo in Wellington was completed and had been opened last October. The Trading Position The accounts showed a gross profit of £1,351,143 and after deducting distribution costs and general expenses and providing for depreciation, taxation and contingencies, and paying £698,968 in beer excise there remained a net profit of £130,697. This was an increase of £38,138 on .that for the previous year and reflected in part the benefit the company had received from the earnings of the additional capital employed during an appreciable portion of the year. The amount brought forward from last year was £25,710 which, added to the net profit for the year made £164,408, An interim dividend at the rate of 4 per cent.,amounting to £65,454, was paid during the year and the directors now recommended a final dividend at the rate of 4£ per cent, (making in all 8J per cent, for the year). This dividend would absorb £73,592, and there would remain £35,401 to carry forward to the new year’s accounts. Each of these dividends had been calculated on a basis of the new capital having been paid over the whole year, .whereas only part of this capital was revenue-earn-ing over the whole period. The balance sheet figures, the chairman said, showed considerable variation consequent upon, the increase in capital and the expansion of. the com pany’s business. Land and buildings stood at £1,213,539, and the Increase of £660,455 was represented to a large extent by the purchases of hotel’properties. It was the intention of the directors to reduce the book value of the land and buildings to £135 777 being the amount now standing to the credit of the share premium account. Additions made to machinery and plant during recent years had 1 caused a steady increase to £ 148.168, or £44,678 higher than in the previous year. Increased Stocks Held Stocks on hand at £245,077 were £82,861 above last year. The company’s increased turnover and further increases in the prices c raw materials, together with unusually heavy deliveries of the new season’s barley crops, had affected the quantities and values of stocks. Extra purchases and higher prices had also ncreased the advances to barley and hof. growers by £5319. The value of furniture and fittings and hotel asoets had increased by £41,833, and stood at £51,012. This increase was to a large extent concerned with the Hotel Waterloo. Investments and advances to the trade at £556,516 showed the comparatively small increase of £14,808 on last year’s dgures. The amount owing on current accounts was £237,596, which was £45,793 in excess of last year’s total and reflected increased sales. On the liabilities side ot the balance sheet, Mr Madden said, the capital account now stood at £1,635.379 Sundry creditors had increased by £40.610, and the amount owing under this head was now £190,010. Amounts owing to properties purchased and secured under mortgage had increased by £20,312, those liabilities now totalling £50,785 The directors had deemed it advisable to add £IO,OOO to the taxation reserve account, bringing it up to £900,000 and the usual addition of £SOOO had brought the insurance reserve up to £55,000 The general reserve account remained at £115,000 The credit balance with the company’s bankers last year was £17,141; this year they had an overdraft of £lOO.llO The difference in the position of thuaccount, £117.251 had been required in connection with the general expansion of the company’s business