OTAGO POWER BOARD

Evening Star, Issue 21960, 21 February 1935, Page 3

OTAGO POWER BOARD

ANALYSIS OF BALANCE-SHEET DISCUSSION AT MONTHLY MEETING The monthly meeting of the Otago Electric Power Board, held at Milton on Tuesday afternoon, was attended by Messrs G. Moore (chairman), D. Boyd, J. K. Simpson, R. H. Michelle, A. E. Russell, C. R. Smith, and W. Lee. The board’s audited balance-sheet for the period ended March 31, 1934, was placed before the members at the January meeting, when its adoption was deferred for a mouth to enable members to make a study of the contents. When Mr Smith rose to commence his analysis of the balance-sheet Mr A. E. Russell (ex-chairman) raised an objection, claiming that there was no motion before the meeting. This difficulty was overcome by Mr D. Boyd moving that the balance-sheet be open for discussion, Mr W. Lee seconding the motion, which was carried. Mr Smith remarked tha.t the balancesheet, which was about ten months overdue, dealt with the second year’s work since the three new members were elected to the board in 1932. He asserted that, in the interests of his ratepayers, he had a right to analyse the balance-sheet and endeavour to show in plain figures how the board’s affairs were progressing. He would defy almost anyone except an accountant to know the exact state of the board’s financial position. Mr Bussell: That was explicitly shown in my address on retiring from the chairmanship. The figures were clearly shown, and Mr Smith has no right to criticise the audited balance-sheet. Any official statement should be issued by the chairman or secretary—not from an individual member. The audited bal-ance-sheet is open for inspection by any ratepayer sufficiently interested. Mr Smith reiterated his right to deliver an analysis on the board’s financial position. The Chairman: D,o you intend to make a comparison with former years? Mr Smith: That is an unfair question. What is wrong with the board members? Are they endeavouring to block discussion or analysis of a question of Important public interest? I claim to possess knowledge of finance, and have spent several hours preparing a complete analysis of the board’s finances. Am I to be debarred from giving a summary of the financial position? Mr Lee urged that Mr Smith be granted permission to deliver his analysis. The ordinary layman could not understand, balance-sheets. Mr Boyd: Rubbish!

Mr Russell remarked that some people were of opinion that Mr Smith was the only member on the hoard whb possessed a knowledge of finance, and he took strong exception to Mr Smith being held up as an expert on finance. Mr R. H. Michelle considered that ratepayers had the right to know what was being accomplished compared with previous years. 'He would support Mr Smith. - • Mr Lee remarked that there was nothing to prevent any member going outside and dealing with the balance-sheet. It ws£s therefore preferable that any criticism should be delivered at the board’s table. If such discussion were blocked it would appear that the board was endeavouring to hide something. He (Mr Lee) did not wish any deprecatory remarks concerning former boards, but thoroughly enjoyed Mr Smith’s intermittent statements on the board’s present financial position. Mr Russell said he regarded Mr Smith’s analysis as a personal reflection upon himself. He had presented a statement on the board’s financial position when retiring from the chairmanship. There was no material alteration in the audited figures compared with the draft statement then prepared by the clerk, and it was unfair that the opinions expressed by individual members should go forth as an official statement by the board. Any criticism by Mr Smith should be taken “ in committee.”

Mr Smith said that the public would then hear nothing about the board’s business, and it was entitled to the information. He would defy anyone without a knowledge of accountancy to make “ head or tail” of the figures disclosed in the balance-sheet. The board had reduced its rate’s by 60 per cent, for the current year, and surely the ratepayers were entitled to know the present improved financial position. Mr Russell: What is to be gained by analysing the report. The board cannot alter the audited figures, and any official statement for publication on the board’s finances should emanate from the chairman or the secretary. That practice is adopted by other boards. Other members pointed out that the analysis would be merely, Mr Smith’s expression of opinion as an individual member- and would not be accepted as an official statement., Eventually Mr

Smith was permitted to proceed with his complete analysis of the boards financial position, copies of which were distributed amongst members. Mr Smith commenced his analysis by giving a detailed statement of the board’s capital, or borrowed money, account, totalling £291,500, of which £280,585 had been expended on works leaving an unexpended .amount or £8,086 after payment of £2,853 into the sinking fund during the course of construction. A concise summary of the board s assets and liabilities as at March 31, 1934, showed: Liabilities £70,296, including sinking fund £32,546, depreciation fund £22,990, loan fund not yet expended £8,086, sundry creditors £3,971, and Macraes Gold Company s deposit £2,564. The assets to equalise the liabilities were: Stocks and materials £5,157, sundry debtors to loan fund £1,236, loan fund in bank £4,393, sinking fund in Public Trust £32,546, owing to board by sundry_ debtors m working account £8,585, owing on rates £3,840, balance of accumulated losses (to be redeemed from rating during this and next two years) £12,325, cash in bank £2,210. 1 , ~ Accumulated Losses. —The board s accumulated losses from 1925 to 1934 totalled £59,741 19s 3d, the yearly deficiencies being: 1925-6, j,^6-7, £3,999; 1927-8, £6,152; 1928-9, £11,403; 1929-30, £10,999; 1930-31, £12,362; 1931-32, £9,225; 1932-33, £3,411; 1933-34, £995. By 1928-29 the accumulated losses totalled £22,747 15s 2d, but nothing was don© towards a reduction of this amount until 1929-30, when the first rate was levied. The actual net amount of rates available since 1929-30 to Match, 1934 (after deducting the cost of collection) was £47,4X6 5s Bd. This left an accumulated loss of £12,325 lSs 7d still to be met. Last year’s loss on the actual working account (£995) was the lowest in the board’s history, and of the rates collected £8,201 13s went towards reduction of former years’ losses. Mr Smith then dealt exhaustively with what he termed the ‘‘elusive depreciation fund, which at March 31, 1934, had stood at £22,990. He demonstrated that this amount would actually be in hand by 1935-36, _ when the first instalment would require to be paid. The depreciation fund was legally held in its entirety by the board till 1935-36, when all further yearly accretions and l-14th yearly accretions (£1,642) of the amount of the accumulated depreciation fund had to be paid over to the Public Trustee. Whilst held in the board’s working account it was performing the task set for it by the Legislature in holding up the board’s bank credit whilst the board had unredeemed accumulated losses, unpaid rates, and unpaid electricity accounts, , , , . Mr Smith also presented a statement showing the- actual loss or gain on the working of power fund account during the past three years (exclusive of rates; 1931-32— receipts, £37,025 8s 7d; expenditure, £42,945 11b 4d; loss, £5,920' 2s 9d. 1932-33:, Receipts, £40,633 ss; expenditure, £41,377 2s 9d; loss, £843 17s 2d. 1933-34: Receipts £40,022 14s 3d; expenditure, £35,633 9s 4d; gain, £4,389 4s lid. ’ proposed extensions. The secretary (Mr L. W. Potter) reported that no official communication had been received from the Clinton Town Board regarding the suggestion made at a recent meeting that > an extension of the board’s transmission line should be made to Clinton. Reporting' on a recent suggestion that electricity should be made available in the Clydevale district, _ the chairman stated that with the engineer he had visited the locality. He suggested that a meeting of the ratepayers should be convened to ascertain to what extent they would be likely to connect up if the transmission lines were extended. It was a sparselysettled area, and he did not think that an extension could be hoped for at present, except on a guarantee basis.— The engineer also reported. Mr Russell made_ objection to verbal reports being submitted, and expressed the opinion, that some definite written report should have been submitted as to the probable cost of the extension.— During the discussion which followed it was shown that only verbal requests bad been received from some of the ratepayers interested, and it was decided that the ratepayers should , take the initiative in making a definite request for an extension. CORRESPONDENCE. The Matau River Board wrote accepting the board’s terms for the supply ot electricity for pumping purposes between the hours of 7 p.m. and 7 a.m.— Received. , The cierk of the Bruce County Council wrote asking permission _to write off outstanding rates, totalling £2 Is 4d up to the year ended March 31, 1933. —Agreed. Mr W. H. Bayly (Owaka) wrote drawing attention to • the state of the open drain on the board’s property at Owaka, the stagnant water . being dammed back by a ditch on the adjoining property. —It was decided to direct the nealth inspector’s attention to the matter. EXTENSION AT KARA POINT. Mr Frank A. Barber (Kaka Point) wrote urging the extension of the board’s transmission lino at Kaka Point to the fishing station. The estimated distance was about four miles, and there would be about twenty probable consumers and also possible installations for milking machines. —On the motioii of Messrs Boyd and Russell, it was decided that the engineer should report on the estimated cost at the next meeting. FINANCE. The statement of the board’s financial transactions for the month ended January 31 showed that receipts had totalled £3,038 6s IDd including £2,999 16s lid for sales of electricity. The cash receipts for electricity sales to the end of December for the past four years were as follows: £31,166; 1932-33, £31,663; 1933-34. £32,450$ 1934-35, £33,084. Expenditure for the month of January totalled £1,016 11s 6d, and the bank pass book showed a credit balance of £14,761 5s Id. The financial statement was adopted and accounts amounting to £9,245 0s 9< were passed for payment.