Dunedin Coffee Palace and Private Hotel Company (Limited.)

First Annual Report of the Directors.

he Board of Directors beg to submit the following Report of the transactions of the Coffee Palace for the year ending 31st December last, with the accompanying Balance Sheet:—

The Company was incorporated in January, 1881, but it was not until the 20th May following that the Palace was opened for general business. This long delay was in a great measure caused by the tire which took place in February last, and which destroyed the Lessor's Bakery at the rear of the front building, and although very little actual damage was done to the Company's property, it necessitated several alterations and consequent postponement of the commencement of business, as the original kitchen was rendered useless, and many of the back rooms were more or less damaged. An arrangement was then made with the Lessor by which he agreed to provide the Company with a larger kitchen on the ground floor, and over that a spacious dining saloon, together with a billiard room on same floor. For this additional accommodation a further rent of £150 per annum was agreed to, which, with the original charge of £600, brought the total rent up to £750. These alterations and improvements occupied several months, and the delay thereby entailed has added considerably to the Preliminary Expenditure, which account has page 4 been charged with all outgoings up to the time of opening, as when the five took place, a manager and two servants were already engaged, and the daily expectation of the building being completed rendered it advisable to continue their services.

Soon after commencement it was thought that the Restaurant had not sufficient accommodation, and the Lessor having offered part of the adjoining premises for £2 per week, the offer was accepted. This raised the total rent to £854 per annum, at which it now stands. Since that arrangement was made, it was decided not to open these new premises as an additional Restaurant for the present, as it would entail further expense in service and furniture without commensurate returns. It is now advertised to be let, but as the business is gradually improving, it is a matter for consideration whether it might not be advantageously opened in conjunction with the present Restaurant.

On the formation of the Company the following gentlemen were elected Directors, viz., Mr J. W. Jago (chairman), Rev. Dr. Roseby, Rev. L. Mackie, Messrs Asher, Bathgate, Blair, Driver, Hooper, Irvine, Proctor, Rennie, and Scott Mr Lewis was appointed Secretary, and Mr and Mrs Hawkins were engaged as managers. On the 10th February Mr Irvine resigned his seat at the Board, and Mr Hudson was elected in his place. On 7th March Mr Quick was elected vice Mr Scott resigned. On 5th April Rev. L. Mackie resigned and Mr Allen was elected. On 25th May Mr Hudson resigned and Mr Scott was elected. On 13th July Mr Hooper was appointed Secretary viae Mr Lewis resigned—this appointment necessitating his retiring from the Board. On 8th August Mr Asher resigned, and on 13th September Mr Blair resigned, and Messrs Chisholm, Jones, and Cameron were elected. On 20th September Mr Bathgate resigned, and on the 10th November Mr Quick resigned and Mr Horsburgh was elected. Many of these gentlemen have devoted a considerable time to the business of the Company, and none of the Directors have received any remuneration for their services.

The present Directors are Mr Jago, Rev. Dr. Roseby, Mr Rennie, Mr Proctor, Mr Allen, Mr Scott, Mr Chisholm, Mr Jones, Mr Cameron, and Mr Horsburgh. Of these, Messrs Jones and Horsburgh have been ballotted out, in terms of Articles of Association, No. 74, but are eligible for re-election, together with two others; but for these two latter seats no nominations have yet been received.

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Mr and Mrs Hawkins were engaged in January to manage the Palace, and continued to do so until the 23rd September, at a salary of £15 per month; the continued losses shown on the out-turn of the Company's business, however, from month to month, notwithstanding the large receipts, rendered it necessary to make a change from the then expensive management, as although Mr and Mrs Hawkins were entrusted with "the entire control of the Establishment in the purchase of provisions and alterations to the Tariff," they failed to make the receipts cover the expenditure, and the Directors therefore engaged the present Managers, Mr and Mrs Willis, at the same salary, who commenced their duties on 29th September. Under the new regime the business has greatly improved, and during the past two months the profits have been very satisfactory.

The difference between the proceeds of the business under the old and new management becomes very marked on comparing the successive losses prior to the appointment of Mr Willis, and the rapid recovery and steady profit since. In June the loss exceeded £60 per week, in July about £35 per week, in August more than £7 per week, in September above L10 per week, and in October about £19 per week. Mr Willis was appointed in the month of October. In November there was a slight profit. In December the profit amounted to nearly £150. This profit has continued to increase till now. During the last eight weeks it has amounted to £205. The amount o business has throughout been not only good, but far in excess of our expectations—some of the best weeks under the new management being quite matched by some under the old. In July the weekly returns were : £149, £163, £145, £113, £124. In December (under the new management), the weekly returns were: £122, £134, £140, £154. It is specially noteworthy that during the month of July, when the weekly returns were so high, the business was making a loss of £35, whilst in December, with scarcely so large a weekly return, the business made a profit of nearly an equal amount

The Directors have met weekly since the opening of the Palace, and have held many Committee and other meetings besides. The minute-book will show the anxiety which the continued reported losses occasioned the Directors, and the means taken to check them. For this purpose the Directors made a careful and repeated investigation of the Company's expenses—examining them item by item. They established a system of weekly audit, had frequent conferences with the Manager, and page 6 made repeated and earnest representations to him on the subject. Finally, they held out unusually strong inducements to him to render the business remunerative, and gave the management for the month of August entirely into his hands; this was done no less out of deference to the feeling of a large number of the Shareholders, than with a desire to do justice to the Manager himself. The Directors felt, however, that the time had now come for decisive action. They accordingly terminated the late Manager's engagement on the 23rd September.

The Balance Sheet shows an amount of £68 for calls unpaid, but this has been since reduced to £9 7s 6d, the amount now owing, and which there is every reason to believe will be shortly paid. In the furniture account, £161 17s has been passed off for depreciation, at the rate of 10 per cent, per annum for seven and a-half months, and the same has been done with the fittings and fixtures account in £23 11s 5d, and the building improvements account in £21 12s 1d, this latter account is charged with the cost of fixtures, which will have to be paid for at the expiration of the lease with Mr Hudson, as provided therein. From the total of Preliminary Expenses one-third has been passed off, leaving the balance to be distributed over the next two years.

The receipts from the Hotel to the 31st December were £1,510 15s 8d, and the number of persons frequenting it from day to day was 6,895, or an average of 30½ per day—this part of the business has been steadily improving under the present management. The receipts from the Restaurant and Saloons were £2,380 19s 2d, with a total number of tickets issued of 51,978, or 264 average per day. The Billiard-room shows £96 12s 6d receipts. This room, which contains two valuable tables, the property of the Company, has been let at £2 per week (without gas or coals) for six months from 4th November last.

The Directors have pleasure in stating that Mr and Mrs Willis are using their best endeavors to make the business a success, as they have on several occasions sacrificed their own comfort and convenience for the interests of the Company. On beginning their management, however, there was much to undo, and it was found necessary to make several changes amongst the employes. By constant supervision and attention to details, in order to prevent waste and extra vagence, great improvements have been made, and the whole Establishment is now working page break smoothly and systematically. This is apparent in the increased returns and a change from continued losses to an actual profit, which there is every reason to anticipate will continue.

The very decided turn in the tide of the Company's affairs will, we are sure, inspire confidence. A business is now established whose dimensions are steadily growing. At the end of nearly eight months, when the mere novelty of the thing has quite worn off, we find an average attendance in the Saloons and Restaurant of 264 persons per day—an average remarkably constant from month to month from the beginning. The Hotel has an average almost equally constant of thirty per day. The average income is £124 per week. The business was not so large in December as it was during the exceptionally favorable month of July; but in July there was a loss of L35 per week, whilst in December there was a profit of about an equal amount All this shows that if the capital of the Company under the present system of management is sufficiently increased to relieve the difficulty occasioned by the very limited capital of the Company, there is now every prospect of a good paying concern. This difficulty may be seen in the fact that the Company has expended in furniture, building improvements, fittings, fixtures, and preliminary expenses a sum exceeding the paid up capital by £445 5s 7d. At the present rate of profit it would be a matter of no difficulty to pay a dividend at the rate of 12 per cent, besides establishing a substantial reserve.

In view of the difficulty above stated, arising from the deficient capital of the Company, the Directors recommend that the dividend payable to Shareholders under the terms of the Lessor's guarantee be placed to the credit of the Company.