COMPANY MEETING

BOOTS PURE DRUG CO.,

LIMITED

THE fifty-second annual ordinary general meeting of Boots Pure Drug Company, Limited, was held on June 6th, 1940. The Rt. Hon. Lord Trent, Chairman of Directors, said: As usual, I assume we may take the accounts as read.

Freehold properties are up £120,668, plant and fittings £86,220, stock-in-trade shows the substantial increase of £743,423.

Sundry debtors are up £188,531, whilst amounts owing by subsidiary companies show a reduction of £93,698. On the other side of the balance sheet sundry creditors and provision for contingencies show an increase of £762,634. Up to date we have spent more than £150,000 on A.R.P. and as far as we can see there is unlikely to be any further large sum required under this heading, but as it is impossible to foretell what buildings will be required during the war, or indeed after it, we have made up the works development reserve to £100,000. The freehold property reserve has been increased by £29,298.

Last year I said that under the conditions then obtaining your directors considered it prudent to have a substantial contingencies reserve. Today, that is, obviously, even more desirable and we have accordingly transferred £250,000 to that fund, bringing it up to £750,000.

Let me now revert to the matter of our stock-in-trade. You will appreciate that essential medicines are a vital need for the country alike in peace and in war. Therefore your directors regarded it as their duty to make sure, as far as was humanly possible, that the supplies would be in the right place when they were wanted. Although this country is infinitely better placed than it was in 1914 to supply essential medicines and fine chemicals, a good many of the raw material, particularly those of a vegetable origin, come from abroad.

It was in order to safeguard the supplies to the public that we built up a substantial increase in stock, a large proportion of which has already been turned into finished products and is stored all over the country. Remembering the transport difficulties during the past winter and the not remote possibility of further interruptions of trans- port in the coming months, I am sure you will agree with this policy. I need hardly say that all ;hese stocks have appreciated in value since they were bought, but following our established policy, our prices have only been increased and will only be increased when our costs make it necessary.

In concentrating our main effort, as we have done, on essential medicines and surgical supplies, we have not always been able to provide full supplies of our whole range of toilet preparations. I am satisfied that our shareholders and customers will agree that at a time like the present we must subordinate the semi-luxury side of the business to the medicinal side. They can, however, rest assured that we shall continue to offer a reasonably wide range of toilet requisites as long as raw materials and containers are available. Turning now to the profit and loss account, you will see that our trading profit, after providing for contributions to staff pension funds, management remuneration, compulsory war risks insurance, and all forms of taxation, i.e., income tax, and E.P.T., amounts to £980,851, an increase of £29,842.

Repairs and renewals and provision for depreciation all show increases, and we are left with a net profit for the year of £782,467, an increase of £6,175.

After payment of all preference and preferred ordinary dividends, and of four quarterly dividends of 6 per cent., less tax on ordinary shares, we have a balance of £301,717 which together with the balance brought forward amounts to £550,411, against £642,272. For many years your directors have recommended the payment of a bonus of 3d. per share (free of tax) on the ordinary shares, but the introduction of the Limitation of Dividends Bill made this no longer possible, since the rise in income tax has the effect of increasing a tax-free bonus.

Your directors, therefore, recommend the payment of 4.1379 pence per share (less tax) on the ordinary shares, which -is the gross value of a bonus of 3d. per share (free of tax at 5s. 6d. in the D. This absorbs £68,965, which together with the allocations already mentioned will leave £199,711 to be carried forward to next year. -We have easily had a record year for sales both at home and abroad, but practically the entire profit on the increased volume has been absorbed, as I have said, by increased taxation, &c., and we are left with a smaller net profit than in 1937, when both our volume of trade and trading profit were considerably less than this year.

These results have been achieved under quite exceptionally arduous working conditions and with a staff inadequate for our requirements, for already over 1,300 have left to join the forces. And though we have engaged temporary staff to the number of 1,650 to take their places, the amount of work has been so great that these new members of the staff have not made up for the experienced ones we have lost.

There is all the more reason, therefore, to pay. a special meed of praise this year to the staff of the offices, laboratories, warehouses and shops for their excellent work in most trying circumstances and I know that you would like me to place on record our thanks for and appreciation of what they have done. Alike in the works and in the. branches they have resoonded splendidly to all the calls made upon them and this in spite of the fact that they were often short-handed owing to the calling-up of staff for the services and to absences through sickness during the exceptionally hard winter. In spite of all these difficulties we have received many tributes to their smiling and helpful service to their customers, and I have the fullest confidence that we can rely upon their devotion to duty and their courage in the stern days that lie ahead of us.

In addition to those who have joined the forces, more than 5,500

of our staff have been trained in A.R.P. and first-aid work. You will be glad to know that we have instituted a system of allowances for all married men serving with H.M. forces and in certain other special cases we are supplementing army pay.

One very important way in which the firm are helping the national war effort is in the matter of war savings certificates. The various savings groups which have already been formed have 10,236 sub- scribers, and it is hoped that there will be a material increase in the individual holdings in the next few months.

During the year we have opened 25 new branches and, owing primarily to war conditions, have closed ten. The total number open at the end of March was 1,210.

As you will be aware, owing to the control of timber as well as of other building requisites, it is now practically impossible to carry out any alterations beyond those absolutely necessary on the medicinal side of the business. Our shopfitting works, however, are being kept employed on Government work, and so we hope to have our fully- trained staff available when the time comes for us to tackle peace-time projects once again.

As I have said, our sales easily beat all previous records and the total number of retail sales transactions increased by over 8,500,000. Apart altogether ffom the war, the weather of last winter led to a bigger demand for chemists' merchandise than for very many years.

Last year I referred in my speech to the steady increase which had taken place in our export trade. This year I am glad to be able to report further substantial development. The figures for the first four calendar months of this year are more than double those of the corresponding period of last year.

As you know, the Government have asked all companies to pay particular attention to the development and expansion of their export business. We have taken our responsibilities in this connexion very seriously and are only too anxious to play our part in association with export groups, to several of which we already belong. We are also co-operating with other exporting pharmaceutical organisations to the same end. In order to assist the Government's effort in this important matter, it has been necessary for a time to ration the home market in a few lines.

One peace-time practice which gave a good deal of pleasure to large numbers of our shareholders and customers was the conducting of visitors round our factories at Beeston, but this has had to be dis- continued for the duration of the war.

MEDICINAL RESEARCH The undesirability of perpetuating the goodwill in enemy proprietary medicines has led us to elaborate processes for the manufacture of British-made equivalents, and in several cases our products are now on the market. Methods of manufacture of other foreign-made drugs have also been under investigation by our research department since British manufacture would both save import and therefore shipping space, and also give us further lines to export.

In the case of certain chemicals, manufacture has been complicated by the fact that materials normally used as intermediates in their manufacture have not been purchasable and research has been neces- sary with a view either to manufacturing the intermediates ourselves, or to finding some alternative route to the final product.

All these tasks have thrown a very large amount of work on our research department and we have consequently expanded it very considerably.

The processes elaborated in our research department lead to produc- tion in the fine chemical department, and this has consequently also been extended. It may be of interest to note that the fine chemical department was called into being in 1915 as a result of the last war and has constantly developed during the last 25 years. It is now a valuable asset not only to the firm but also to the nation, particularly in its capacity for producing medicinal chemicals for home and export.

AGRICULTURE AND VETERINARY We are conducting a considerable volume of research on the influence of nutrition and the special significance of trace elements on the health of farm stock as well as on the treatment of various diseases of animals. In this work we are co-operating with agricultural colleges, and also with individual veterinarians. We regard this side of our work as so important that we have now increased our staff on this side by the addition of a full-time veterinary surgeon of the highest standing to advise us.

As a result of our association with the experiments carried out in Derbyshire on the prevention of swayback in lambs, we have put on the market our " Mindif " licks containing trace elements. They are enjoying a wide and increasingly large sale among sheep farmers.

Following researches on chemicals which stimulate the root-growth of plants, carried out in association with high authorities on the biological side, we have introduced a new product " Harvesan " con- taining these " growth hormones " in addition to the mercurial salts which protect crops from certain diseases. Extensive field experiments have proved that higher yields of grain and other crops can be obtained by the use of this preparation.

HORTICULTURE During the last few years we have been busy building sound founda- tions on the horticultural side of our business, the consequence being that when the call came for the nation to grow more of its own food we were in a position to give real help and this has led to a rapid expansion on that side of our business.

Since the war began we have assisted the Ministry of Agriculture by distributing through our branches some 300,000 of their leaflets dealing with food production in garden or farm.

Nobody today would forecast the business future, but our share- holders can rest assured that they have a sound business, well dis- tributed for retail sales, and an organisation determined under all circumstances to live up to the slogan Chemists to the Nation."

The report was unanimously adopted.