MUNICIPAL TRADING

Otago Daily Times, Issue 23333, 27 October 1937, Page 7

MUNICIPAL TRADING

PROFITS FOR HALF-YEAR INCREASE OF £9634 ANALYSIS OF FIGURES The profit and loss account of the municipal trading departments for the half-year ended September 30. 1937, which were presented to last night's meeting of the City Council by Cr M. Silverstone, disclosed an increase in profits of £9634, as compared with the corresponding six months of last year. The following is the comparison of me profits with those for the half year ended September, 1936 (shillings and pence omitted): —

The above departments have contributed £9692 to the Municipal department in relief of rates, and have expended £33,303 out of revenue on extensions during the half year, thus appropriating £42,995 of the above profits. It is necessary to point out that the method of dealing with sinking fund and depreciation in each of these departments has been altered. Prior to this year, each department's profit and loss account was charged with depreciation at a fixed percentage of the wasting assets before arriving at the net profits, while the annual payment for sinking fund was not charged against the profit and loss accounts.

It has now been decided to drop the depreciation charge and to debit the payments for sinking fund directly against the profit and loss accounts in lieu thereof. The effect of this alteration in the accounts for the past half year is as follows:

WATER DEPARTMENT Consequent on the levying of an additional penny rate and also a rise in the total valuations, the revenue from water rates shows an increase of £5454. The probable revenue from hose taps has been estimated at £ISOO for the - half-year The revenue from special supplies and sundries has also increased by £419," thus making a total increase in the revenue of £7373. On the expenditure side there have been increases as follows: Interest £698 Renewal Fund contribution .. 774 General 579 Sinking fund and table loan instalments 3077 £5128

The net profit is. therefore, increased by £2245. During the past half-year the Water Department has expended £21,916 on extensions, towards which it has received £11.505 from the "Special Works Fund.'' GAS DEPARTMENT The revenue of the Gas Department shows an improvement of £I7BO over the figures for the first half of the previous year. On the other hand, the total expenditure has increased by £BBS, thus leaving an increase in the net profit of £895. Profit and loss account is charged with sinking fund contribution of £1836 as against a charge for depreciation of £2213 for the same period of last year. The profit and loss account thus benefits to the extent of £377.

The cost of coal is up by £914, due partly to an increase of 118 tons in the quantity of coal carbonised and partly to an increase of Is 6d per ton in the price. The expenditure on extensions during the past six months amounted to £2214. ELECTRIC DEPARTMENT The revenue of the Electric Department shows a remarkable expansion for the half-year, the increase over that at September, 1936. being as follows: Domestic current , £4.803 Business light'ng 3,953 Power 4.697 Sundries 246 Total increase £13.704 On the other hand, the outgoings show an increase as under:— Purchase of power from the Government £2,430 Generation expenses .. .. 1,533 Distribution expenses .. .. 3,346 Interest and renewal fund .. 1,496 Genera] and sundries .. .. 1.268 Total increase £10.073 This leaves an increase in profits of £3631. The profit and loss account also benefits to the extent of £2361, due to being debited with sinking fund in lieu of depreciation, and the net profit is thus increased by £5992. The increase in the amount paid to the Government is due to the extra load being obtained from Waitaki power station and the increase in generation expenses is due to an additional £965 for fuel for the stand-by plant and also to the higher wages now payable.

It was found necessary at times to use the full capacity of Waipori power station together with our full contract of 2846 kilowatts from Waitaki and also to run both the steam plant and the Diesel engines in order to meet the demand for current. The increase in distribution expenditure is chiefly due to the 40-hour week and the increase in wages. During the past half year the department has spent £19,590 on extensions and has contributed £9192 to the Municipal Department in relief of rates. These two items absorb £28,782 of the net profits, leaving the department with a net balance of £6684 TRAMWAYS DEPARTMENT During the past half year the City Tramways have had the benefit of the increased fares, and the revenue consequently shows an increase of £10,467 over the corresponding period of last year. The working expenses show an increase of £7852 for the half year, due to the alteration in hours and rates of pay, which were in operation for only one month of the half year ended Seotember, 1936. The charges for interest, renewal fund and sinking fund are reduced by £265 due to sinking fund being charged to profit and loss account in lieu of depreciation Mornington Trams The revenue of the Mornington system shows an increase of £202. Working expenses are increased by £866. due to the alteration in hours and wages. Renewal fund, sinking fund and interest show reduction of £2O Roslyn Trams Roslyn tramway revenue has increased by £316. while on the other hand the working expenses are greater bv £ 1081 and the overhead charges for interest, renewal fund and sinking fund are increased by 190, thus leaving the half-year worse by £955 than the corresponding period of 1936. The loss on this system for the half year is £BB9, as compared with a profit

of £65 at September, 1936. The cost of running the Diesel buses on the Maori Hill route, which amounted to £1668 for the half year, is charged against the Roslvn trams. Motor buses have taken the place of the tramways on Sundays, and this revenue and likewise the expenditure have gone to the buses account. * Motor Buses The revenue from the motor buses shows an increase of £3268. but the working expenses are up by £3389. Renewal fund contribution, which is at the rate of 2d per mile, is increased by £515 on account of the additional mileage, while overhead expenses are increased by £142, mainly for interest on the additional capital expenditure for new buses. The profit from the whole of the combined tramway and bus operations for the past six months is £3503, which is £5Ol better than was shown 12 months ago. RENEWAL FUNDS The following shows the operations on the renewal funds during the past

The fund has thus been reduced by £31,480 19s 7d. The s'm of £25,776 was withheld from the contributions and paid to the "special works fund." The Mayor (the Rev. E. T. Cox) said that there was reason for satisfaction in the fact that the trading departments had shown a profit increased by nearly £IO,OOO for the halfyear, despite the restoration of cuts and the 40-hour week. " The purpose of these departments is not so much to make profits as to give service to the public," he said. "The margin of £49,848 18s 2d and the increase on the previous six months are very satisfactory."

1936. 1937. Increase £ £ £ Water .. .. 3,309 5,554 2,245 Gas 4,429 5,324 894 Electric .. .. 29,474 35,466 5,992 City trams .. 1,353 4,232 2,879 Mgtn. trams .. 1,083 438 t644 Roslyn trams .. 65 *889 f954 Buses .... 499 *278 +778 * £40,214 £49,848 £9,634 * Loss, t Decrease.

DepreciaSinking tion. Fund. ' . 1936. 1937. Water Dept. 2,377 5,454 incr. 3,007 Gas Dept. .. 2,213 1,836 deer. 377 Elec. Dept. .. 14,370 12,009 deer. 2,361 City trams .. 3,740 3,418 deer. .322 Mgtn. trams 230 240 incr. 10 Roslyn trams 175 339 incr. 164 £23,105 23,296 incr. 191

half-year:— £ s. d. Total renewal funds, 31/3/1937 Contributions for halfInterest earned .. 464,344 7 2 16,066 17 5 9,497 2 4 489,908 6 11 Withdrawals for newals .. . rc57,044 19 4 Balance at 30/9/37 £432,863 7 7