N.A. Power Board Profit Jumps From £882 To £13,070

Northern Advocate, 10 May 1940, Page 8

N.A. Power Board Profit Jumps From £BB2 To £13,070

In four years the’ profits of the North Auckland Electric-Power Board have jumped from £BB2 to £13,070. In submitting his report, which included this information, to the annual meeting of the board in Dargaville yesterday, the secretary (Mr S. P. Day) stated that the past year’s operations and results had again exceeded expectations. “The undertaking has grown rapidly in comparison with other rural supply districts, and having overcome the initial trials and difficulties, is proving the wisdom of the board’s policies and the soundness of the district from an electrical supply point of view,” stated the secretary. “The profits shown for the past four years are as follows:—l937, £882; 1933> £5,835; 1939, £8,129; 1940, £13,070. “The profit for the past year has been affected by the payment of £2123 discount on loans, and £934 legal expenses, out. of revenue account, both of which items are not recurring.

“On the other hand the substantial profit shown is affected by the fact that under the terms of the board’s main loan, only interest is paid for the first two years upon each instalment as uplifted. “The effect of this provision is that interest and repayments of principal for the current year amounted to only £15,259, while for the year ended March 31, 1941, these payments will amount to £24,408. Total of £18,041. The credit balance brought forward from the previous year amounts to £4971, and this together with the profit for the present year, gives a total of £18,041 for appropriation. “From this sum, in accordance with a resolution of the board at its last meeting, £BSO has been allocated to a special loan repayment reserve to meet the balance of principal owing after the 10 years term of the loan of £15,000, obtained from the State Advances Corporation. “From the balance, he recommended that the following amounts be written off: Capital account —£1250 from loose tools and equipment; £3784 from preliminary expenses; £2813 from interest during construction; £930 from preliminary legal expenses. “This leaves a balance of £6849 to be carried forward for working capital. “The effect of these recommendations will be to eliminate entirely preliminary expenses and reduce interest during construction to £6OOO, both of which items represent dead assets, and at the same time by contributing from revenue to capital the board will eventually be able to reach lower charges than if such contributions are not made as standing charges are thereby overcome and the revenue is increased.

Capital Expenditure.

“The contribution to the board’s statutory depreciation fund for the year has been reduced to £384, owing to the increased repayment of principal upon the board’s loans.

“This sum with interest accrued for the year brings the sum invested by the board’s depreciation fund commissioners to £5353. “The amount now contributed from revenue to capital, including the recommendations in this report, amount to £19,760, and loans repaid amount to £5,765/9/4 off reticulation loan and £7482/8/7 off advances loan. “Expenditure upon capital account each year since the commencement of active operations is as follows: —1936, £9660; 1937, £53,179; 1938, £78,297; 1939, £80,424; 1940, £69,955. “Tire capital expenditure to March 31, 1940, less writings off and contributions, amounts to £267,065. “The final meter reading for February and March totalled £10,155, which is at the rate of £60,930 per annum, giving a percentage return of 22.81 as compared with the Local Government Loans Board requirements of 15 per cent. Other Revenue. “This does not take into account profits from installations and sales of appliances, rents, and interest on advances and fixed deposits amounting in all to £4976, received during the year. “These items with sales of electricity, give a gross revenue of £62,917 for the year. “Reticulation loan moneys received up to March 31, 1940, amounted to £342,000 of the total reticulation loans raised of £367,000. “Of that amount, £SOOO has been allocated for advances to consumers in addition to the £30,000 loan previously raised for that purpose. “Of reticulation loan moneys raised at March 31, £49,444 is in hand at the bank or on fixed deposit, and with stocks in hand and the amounts still to be received, upon the present rate of expenditure, should be sufficient to cover requirements over the current year. Care in Advances. “At March 31, advances to consumers for installations totalled £33,966, as compared with £29,498 at the same period in the previous year. “This position requires to be carefully watched, as the proportion of loans for installations is very high in this district, and a change in general economic conditions could bring difficulties in this direction. “To provide in some measure for contingencies, a bad debts account has been established, and with this year’s allocation of £375, now stands at £IOOO.

“The agreement with the Public Works Department for a supply of power in connection with the annual amout guaranteed for power purchases commenced from October 1, 1937, and provided as follows: —Ist year, £5740; 2nd year, £8200; 3rd year, £10,660; 4th year, £13,120; sth year, £16,400. Excess in Half Time. After two and a-half years’ operations since the agreement came into force, the load in the lasi; quarter ending March 31, 1940, had reached 2.543 k.v.a., which is 543 k.v.a. in excess of the load required for the fifth year under the terms of the agreement. “The position shows the board has made outstanding progress over the short period of its active operations, and is now well established, but it is possible that a drastic change could take place in the general economic position through the effects of war and import restrictions. “These possibilities must also be considered when requests are received for extensions in districts where large guarantees would be required from settlers to reach statutory requirements.

“Under certain conditions, the board’s present sound position could be rapidly undermined. “The estimates for the year ending March 31, 1941, anticipate another successful period, and in this connection I would state that these estimates have been prudently based to provide as far as possible for contingencies and with a continuance of present circumstances the final results should prove more favourable than the good position disclosed.” The report was adopted without discussion.