N.Z. DRUG COMPANY (LTD.).

Otago Witness, Issue 3499, 5 April 1921, Page 22

N.Z. DRUG COMPANY (LTD.).

ANNUAL MEETING. forty-seoond annual meeting of Messrs Kempthorne, Prosser, and Co.’s New Zealand Drug Company (Ltd.! was held on Thurday afternoon in the Express Company’s board room. Mr Alexander Bathgate presided, and there were between 40 and 50 shareholders present. The directors’ report was as follows:—The directors beg to submit the forty-second report and balance sheet of the company, giving the results as shown on closing the accounts at. the end of the financial year on January 31. The figures are given below, a the directors recommend the available profits shown to be dealt with as under:— The unappropriated balance brought forward from profit and loss account last year wa3 £13,536 5s 3d. Add the net profit, for this year £43,551 Os 6d—£57,087 5s 9d, less interim dividend for half-year to July 31, 1920, at 4 per cent., £13,934 14s, leaving to be dealt with £43,152 Us 9d. It is proposed to apply this as follows:—To the payment of a dividend of 4 per cent, and bonus of 2 per cent., mairing 10 per cent, for the year, £22,477 ss; to add to general reserve (which will then stand at £86,500), £5000; to carry forward to next year, £15,675 6s 9d. In moving the adoption of the report and balance sheet Mr Bathgate said trading conditions throughout the last financial year had presented many difficult features Amongst these might be noted the fact that in the early part of the year overseas stocks of both raw materials and finished articles were not obtainable in sufficient volume for the needs of their growing business, whilst during the last three or four months of the year the position altogether changed., and large shipments of goods of all classes were made at much earlier dates than -was anticipated. Shareholders would note that the value of the company’s stocks, compared with last year, showed an increase of £112,000 odd. He would like to explain that this extra stock was carried generally at the company’s seven establishments—the four drug warehouses, the pharmaceutical factory, and the two chemical fertiliser works. The position regarding this increase of stock was now being rectified by the volume of monthly sales and the smallness of importations. • - He would like shareholders, however, to note that the stock (£188,874) carried by the company at the 1920 balancing period was really quite inadequate for the purposes of their large and increasing trade throughout the dominion. They would be pleased to learn that the turnover of the company during the year just closed reached “ high water mark” since its incorporation. Reviewing the various accounts as disclosed by the balance sheet, Mr Bathgate said it would be noted that the increase m the capital account was £52,368. This increase was due to payments by shareholders for calls on the new issue of shares. There was a decrease m the shareholders’ deposit account of £24,130. This recount had been opened for the purpose of receiving deposits from shareholders for the payment of calls, and the necessary transfers from it were made as the calls became due, hence the decrease in the amount referred to. Subject to their consent, £SOOO out of the profits for the year would be added to general reserve, making a total of £86,500, which, together with the proposed carry forward of £15,675, would give a total reserve of £102,175, which he felt sure they would regard as a very substantial figure Open accounts and liabilities (£143,879) represented amounts credited for goods received prior to the closing of the books; also other liabilities, including provision for the income tax payable on the profits for the year. Turning to assets, they would find stocks valued at £301,120. Having already referred to stock values, he need only assure them that stocks had been most carefully taken and checked; further, that they had been taken on a most conservative basis, and full depreciation had been made, where necessary. The increase in the account for land, buildings, plant, etc., amounted to £69,635. The expenditure on the Hornby works during the past year, less the amount required to provide adequate depreciation over the other properties of the company, accounted for the whole of the increase under this heading. Customers’ book debts (£102,661), compared with the previous year, showed an increase of £1303. This comparison might bo considered favourable, having regard to the. larger turnover for the year just closed. All balances have been most carefully scrutinised and verified, and the amounts shown might bo considered as representing first class trading accounts. Suitable provision bv way of depreciation on war bonds (£94.556 15s) had been made to provide for realisation, and reference to the liabilities side of the balance sheet would show a special account with the Union Bank for £60,000 against these war loan contributions. Dealing with the profit and loss account, it would be noted that the net result of the year’s trading was £43,551 0s 6d, to which must be added the unappropriated balance from last year, less the interim dividend of 4 per cent, paid in September, leaving £4 3,152 Us 9d to be dealt with. Out of this it was proposed to pay a dividend of 4 per cent, and bonus of 2 per cent. (£22,477 ss), making with the interim dividend a total of 10 per cent, for the year; to add to genera! reserve £SOOO, and to carry forward to next year £15,675 6s 9d. Ir was a source of great satisfaction to the directors that the year’s net profits had enabled them to recommend the payment of a dividend and bonus, which, together with the interim dividend paid in September, equalled a total of 10 per cent, per annum, and this notwithstanding the very heavy taxation which the company, in common with others, had to bear. The staff in all the branches of the company's employ had rendered efficient and loyal service, and being largely responsible for the excellent position the company was now in, deserved the thanks of the shareholders. Sir Ueo. Fenwick, who seconded the motion for the adoption of the report, said it was always a source of. pleasure to watch the progress of industrial concerns which had been founded in their midst, especially so when their development was connected, even in an indirect way, with the land, for it was the increased productivity of the land to which they must look for the rehabilitation of the world’s financial and industrial conditions. —(“Hear', hear.’ ). So far as that aspect of its activities which related to the land was concerned, lie regarded the company as being only in its infancy. It had an immense future before it. He had been looking over the balance sheet, and the figures showed that there was every reason to feel gratified at the company’s progress.

Perhaps there was no more striking feature in the balance sheet than the increase in the value of the stocks held, as compared with the figures of the previous balance, the respective amounts being £188,874 for 1920 and £301,120 for 1921. The increase in value was no less than £112,246, and it showed that in these times of high values the finances of all trading companies required the most careful attention of the directors and the executive head. This heavier credit in the stocks hold no doubt accounted for the increase, as compared with the previous year, in the item, “open accounts and other liabilities by £67,493,” and for the decrease in the net credit for war loan contributions and other investments of £55,150. These two sums made £122,643, but there was a slight set-off in the item, “Cash in bank,” of £6433. It was interesting to note that the gross profits for the year were £153,326, and for 1920, £137,950, an increase' of £15,376, as against which the expenses increased by £13,955, the net gain being £1421. Added to this there was a considerable increase in the interest from war loan investments, the net result from the year’s operations being an increased profit of £3740. They would all realise from these figures that the directors and general manager had had their hands full throughout the year, and it was gratifying to be able to produce so satisfactory a balance sheet. He thought the directors had taken a wise step in issuing the new capital. The way in which their business had increased showed that they could not have carried on with the old capital. Another gratifying feature was the erection of their extensive works at Hornby to meet tire demand for manures —a demand which must increase as the years went by. In the manufacture of fertilisers they had, he assumed, probably as large a part of their whole business as all the rest put together, and he believed it would bo their greatest and most profitable line of business. There was ample room for every ton of fertilisers that could be brought into New Zealand. It had been said that the Nauru phosphates would be available for everyone who was able to put. down the necessary crushing plant, but he believed it would be found that the most of it must be converted into superphosphates. The company would probably be a large purchaser of this phosphate, and he would look for the natural extension of its manufacture of sulphuric acid. The company had undoubtedly a very big future, and he saw nothing to interfere with its progress while it was managed on the present sound lines. The report was adopted without discussion. Mr A. James, who proposed the reelection of the retiring directors (Messrs Bathgate and Mill), included in his motion provision for the raising of the directors remuneration from £6OO to £IOOO, remarking that while their work and responsibilities had increased, the value of the sovereign had decreased. Mr W. H. Duke seconded the motion, and added that they were all under debt to Sir George Fenwick for the clear statement he had made as to the company’s future. It was agreed to take the motion in two parts, and the two directors were then reelected on the motion of Mr W. Scoular, seconded by Mr Mitchell. Air James s. motion for the raising of the directors remuneration was then carried. Messrs Bathgate and Mill returned thanks for their election, the former adding that the directors’ policy had been and would be one of steady progress. He took it that their vote for increased remuneration was an endorsement of that policy. Messrs W. Brown and Co. (Dunedin), Newburgh, Best, and Co. (Christchurch), and G. C- W. Morris (Auckland), fc. 1Powles (Wellington) were re-elected audiA vote of thanks was accorded to the general manager, directors, and staff, on the motion of Mr H. W. Mitchell, who remarked that the staff was really responsible for the good results. Mr Win Taylor, general manager, returned thanks on behalf of the staff. It was an excellent staff, and its services had been suitably recognised. The times were difficult —the outlook in trade not. too good but the staff was fairly optimistic even now. lie could assure shareholders that tne administration this year wou’d be economical fiom top to bottom, and he felt sure that whatever could be done by the staff to keep the company in its present position would be cheerfully done, so he hoped tni. at the next annual meeting they would be able to show equally pood results.