MILK DEPARTMENT

New Zealand Times, Volume L, Issue 11497, 18 April 1923, Page 5

MILK DEPARTMENT

FINANCIAL OUTLOOK SUBSTANTIAL RECOVERY CLAIMED BY COMMITTEE. CHAIRMAN’S REVIEW. In the course of a financial review of '' the operations of the City Milk Department the retiring chairman (Air O. J. B. Norwood) gives the following details:— THE ASSETS. “The assets side of the balance-sheet will reveal .in detail the position of the various assets which the department owns and controls. As a set off against the values shown for buildings, plant and equipment a depreciation reserve has been raised to the extent of £14,233 14s 4d, so that the net values of the assets concerned will be well sustained. Goodwill (total value £13,170) no longer appears as an asset having been written off entirely. The other items set out are placed at their respective nett values. The amount of £2919 14s 9d appearing under appropriation account is the final nett loss as shown by the books of the department, covering the working from the inception. When it is considered with the varying losses the department das had to face, councillors will ho able to understand the very great recovery the department has made during tiie period. Although this balance goes forward to next year as a debit, it w ; ll no doubt be found to be substantially offset by certain reserves I will refer to in dealing with the liabilities. LIABILITIES SIDE. “The liabilities side of the balanceaheet reveals three distinct groups of accounts —the capital account, trading liabilities and Reserves accounts. It is satisfactory to show that tho total trading liabilities of the department at March 31st were only £13,855. The reserve accounts total £21,938, which sum is represented by amounts in suspense account, and which have been raised from our working account to take care of possible losses, and also tho depreciation reserve referred to when discussing the ' assets. In considering the loss on working shown before under appropriation account, we must not lose sight of the fact that we have in our balance sheet actual reserves, for £7704 for trading contingencies and £14,234 for depreciation. The item sinking fund does not call for special notice, except that this is provided for from our working account. Amount, £1631. GENERAL REVIEW. “After reviewing the last balance sheet it is necessary to consider the . actual position of the department now after its varying set hacks and losses. Summarising the results we find tho department has made provision for end absorbed losses .as foly • ' ■ £ Goodwill (written, out) 13,170 . Bad debts No. 3 Co. 5,000 Compensation vendors paid 1,055 Depreciation 14,233 Special reserve 7,704 „. ~ . , 41,162 Sinking fnnd established ..1.,:,..... 1,631 Total ........ 42j53 “SOUND COMMERCIAL FOOTING ” “We can, therefore, show that eveu though the present accounts would indicate a loss of but £2919 over all our operations, the department has' found fromita working accounts no less than £42,793. We can see, therefore, that had'we chosen to capitalise each item as are set out above, we Could have shown a substantial book profit.. Our policy, however, haa been to absorb the whole amount and .place the undertaking ■on as sound a ' commercial footing as possible. All this has been accomplished in the face of great dif-i ncullties. iHpu 'will remember the very ■ substantial- loss on last year’s contracts.. This item alone represented £29,000 loss to us, and it is gratifying indeed to know this has now been totally eliminated. ( APPROPRIATION ACCOUNT, - “Glancing at the appropriation account, we will see that the net result [is a debit balance of £2919 14s 9d . This is arrived at after absorbing the tomes on old contracts,' paying off bad debts of No. 3 Company, and compensation to vendors. We brought forward .from last year to help meet these charges suspense account balances totalling £22,950 15s 3d. Summarising these details we have the following position:— * v £ £ Losses sustained through old contracts, April, 1522 to August, 1922 (see general manager's report),... 24,532 Balance of appropriation account 17,995 suspense account 4,475 ■Rahui suspense ao , , oount 480 Brought forward from last year to offset these losses 22,950 Balance of last year’s losses ah. sorbed 1922-3 1,832 £ To this add items absorbed in accounts— Bad debts. No. 3 Comp'any ... 5,000 Compensation to vendors 1,055 Profit of department for seven 7,687 months working from September to March 4,768 2,819 Nett loss as, shown in final appropriation account 2,919 “Th.> figure of profit for seven months’ working is arrived at after allowing for depreciation, repairs and replacements, interest on capital account and sinking fund and superannuation fund—in effect a most substantial recovery over a period of seven months.”