COMPANY MEETING

MITCHELLS AND BUTLERS,

LIMITED

POPULARITY OF COMPANY'S PRODUCTS GROWTH OF SALES SIR W. WATERS BUTLER ON THE BURDEN OF TAXATION TtiE fiftieth annual general meeting of the Ordinary Stockholders of this company was hell at the White Horse Hotel, Birmingham, on Thursday, November ath, under the presidency of Sir William Waters Butler, Bart.

The Chairman, in moving the adoption of the Report and Accounts said : Ladies and Gentlemen, as stated in the Report, the directors are pleased with the results of the trading during the year, and I am sure you will be glad to hear that the great popularity of our products has been responsible for a remarkable increase in the sale of our bottled ales and stouts.

Increased output was only to be expected to follow the present industrial prosperity, and, of course, with increased output, one naturally looks for increased profits, which I am glad to say has been the result.

Our profits, in addition to an increased rate of Income Tax, have borne the deduction of National Defence Contribution for the half year commencing April ist last. This half year's contribution amounts to nearly z per cent. on the company's Ordinary Stock, and it will be borne in mind that for the current financial year the company will be liable for a full year's contribution. I am sure, however, that all of us must feel willing and content in so contributing to the necessary cost of the defence of our country.

With the heavy payments we are called upon to make in connexion with Beer, Spirits and Licence Duties, one feels that our trade can rightly claim that at the earliest moment national taxation can be reduced our industry should be granted some relief. At the same time, I can understand that people who do not appreciate from a study of the balance-sheet the full amount of capital employed in the business might consider that a concern which can declare a dividend of 23 per cent. on its ordinary stock does not appear to require any relief of taxation, but rather may be looked upon as making an abnormal profit. This, however, is an erroneous view, for the percentage of profit ought to be calculated on the whole of the capital employed in obtaining the profits ; in that way, it will be seen that trading capital includes not only stock capital, but reserves which are mainly derived from surplus profits not taken out of the business but again " ploughed in " in the trading operations of the company. The percentage of profits so calculated in our own case cannot be considered otherwise than a very reasonable commercial return on the total capital employed.

It will be noted that in the balance-sheet we have established a new Reserve Account to be called the " Property Reserve Account," by transferring thereto a sum of £150,000, which in 193o was specifi- ally reserved against properties for which it was thought necessary or desirable to make "provision for anticipated expenditure not adding to capital value." That sum has not been utilised, and we now think it can be brought out to commence this new " Property Reserve Account." The words I have just quoted, which since 193o have been in the Property item of the balance-sheet, are no longer neces- sary, and disappear, and the Property item in the balance-sheet is no longer reduced by the amount of that provision. We recommend for your approval the appropriation from the profits of the year of a further £5o,000, as an addition to this new Property Reserve Account, making it a total of £200,000.

We have felt it advisable to establish this Property Reserve Account in consequence of the great and growing expenditure we are called upon -to make in connexion with our properties ; this includes the alteration, extension or rebuilding of old properties and the building of new properties in the place of licensed properties demolished in connexion with slum clearances or street widenings.

I want to make it clear, however, that while we are creating a fund which will be available to meet expenditure which does not add to capital value so far as our trade is concerned, we are not suggesting a revaluation of the whole of our licensed properties ; indeed we are fully satisfied by a careful analysis of all our properties and their earning power that the trade value of the properties in the aggregate is in excess of their total book values. We think that this Reserve Account should prove useful to avoid properties appearing in our books at values which are above their market values due to additions from time to time of the costs of structural improvements which have not added directly to their earning power and trade value. From time to time additions from the profits of the year may be made to this Property Reserve Account.

Withdrawals from the Fund and additions thereto will be limited because the operations of the Fund will be confined solely to the purposes for which it was created. We are now expending in- creasing sums upon our properties and the costs of carrying out the same are much greater than formerly, due to numerous causes such (Continued at foot of next column.) as increased values of sites, higher building costs, dearer equipment of fittings and fixtures, and the provision of more roomy premises and amenities such as bowling greens, and assembly rooms for friendly and other societies.

I regret that undesirable forms of competition are making their appearance, due in a great measure to the growth of bogus clubs and so-called "bottle ' shops. The Government has promised, as stated in the King's Speech, to introduce legislation to check bogus dubs, but it is very slow in making its appearance, notwith- standing that magistrates and others responsible for public order insist that an amendment of the law is an urgent necessity " for preventing abuses of the law relating to clubs."

While still a believer in " fewer and better " licensed houses, thanks to our own company and other brewers there is now 'no real redundancy position in Birmingham. The total number of licences is not excessive, but owing to the movement of the popula- tion, existing licences in the older parts of Birmingham should be " thinned ' by redistribution, that is to say, more modern houses could be erected in districts where at present there is not sufficient provision for the needs of the inhabitants.

I am pleased to say the so-called Temperance Party was never so dormant in my lifetime as now, but do not let us, therefore, assume that we can now disarm. Rather we must strengthen and maintain our defence organisations in a high state of efficiency so that we may be ready and prepared to meet any attacks which may be made upon the licensed trade.

I can only hope that. the count's flourishing condition will be maintained, as the Prime Minister and other prominent men predict, and that the Government's efforts to bring about more peaceful conditions throughout the world will be successful.

In conclusion, I am glad to confirm what the Economist, a financial paper of standing, has said of the Ordinary £t stock units of our company, viz. : " They represent an equity in a sound brewery in a prosperous area." Long may that be the position I

I have much pleasure in moving the adoption of the report and I will ask Mr. Bainbridge to second it.

Mr. Herbert W. Bainbridge seconded the resolution, which was carried unanimously.