SHRINKING PROFIT

Evening Post, Volume CXII, Issue 138, 8 December 1931, Page 5

SHRINKING PROFIT

SHOW ASSOCIATION

SINKING FUND ON LOANS

■'. A summary of the profit and lo«i account and balance-sheet of the Wellington Winter Show Association was presented to the City Council by the Citf Treasurer (Mr. C. Collins) last night. "The loan liability is* now £55,590, consisting of first debenture issue £50,000, second issue £5590/"* he stated. ."Tne rate of interest is 8 per cent. The capital expenditure on buildings, grounds, fittings,* plant, etc., is £72,689 7s 2d. The additional money to meet this capital expendi-' ture'in excess of the debenture money ha« come out of the accumulated surplus. "With reference to the profit and los« account, it is noted that the revenue for _ the year showed a considerable drop over - the previous year owing to the prevailing ■" economic conditions, and the profit of £3984 12s 8d was less by £1696 than the , previous year. After meeting debentures interest, £4217 15s lid,- the working profit :j disappears, and a loss of £233 3s 3d is - shown. No appropriation to sinking fund , for the year has yet been made, and. iti« - :/ proposed by the association to defer the, payment until further moneys come in. DIFFICULT POSITION.

"There is a resolution of the council -to .- the effect that a sinking fund of 1 1-3 per " cent, of the moneys borrowed shall be set aside annually. This would amount to ; £741 4s, on the present debenture issue. "A perusal of the balance-sheet shoyri that apart from the land and buildings there are cash assets of £3847 ss, 7d and accounts due to the Show Association of £1228 15s, making a total of £5076.75. 6d, Against this, there are liabilities to sundry; creditors and depositors of £2492 17s 4d. This shows a surplus of liquid assets, of £2583 3s 3d, and it would appear that, the association could put aside the sinking fund of £741 4s. I find) however, that i the association has to pay half-year's in- L r terest, £2000, on debentures in March next, and the revenue to come in will not < exceed £400. It will be difficult for^the , association to pay the above amount into/ the sinking fund at the present time. : * •1 may mention that the Wellington .' Exhibition Grounds Act, 1927, under which, the association is operating, does not * stipulate a fixed payment to sinking fund, ; and the prospectus of the debenture issue ~ did not contain any reference to the sink- ; ing fund. No breach with the debenture ;, holders will be committed if the. sinking fund payment is deferred until later. It . seems, to mo to be a matter for the council as to whether the sinking fund'pay- • ment may be held over for a while, but having once established the fund, the payment for the year should not be • waived altogether." • The Mayor, Mr. T. C. A. Hislop, said that undoubtedly the association had. agreed to pay a definite amount to sinking fund each year., There wal enough money in hand to pay that annual amount, but if that was done there r ■would bo difficulty in meeting the; interest bill next March, and' the aissoeia- •; tion wanted a postponement of the payment of the sinking fund amount in the interval. If the association. had the money available, he thought, it should be'paid. Councillor F. 'Meadbwerof t said that the association had agreed -to the al- - location^, and when, application had been made for permission to.raise extra money for the making, of the new sports ground the council gave consent on theunderstanding that the sinking fund should be arranged, and to that the association agreed. There had been no request; from the association, but the City , Treasurer, "the council's watchdog,V had pointed out that no provision' had been made for sinking fund. If the amount • was not, paid this 'year ' then it was going to be very difficult to get it next year. ' ' The Mayor said that there was■■'<* floubt whether the council was able t« - compel payment; the point would be inquired into. ■•"- '•;/>■':-'-.'■'■'■'. .'^.-,. .