FINANCIAL STATEMENT.

Hutt News, Volume 3, Issue 1, 29 May 1930, Page 11

FINANCIAL STATEMENT.

VALLEY ELECTRIC POWEK '■'■■■XT' BOARD /

A SATISFACTORY POSITION

At the annual meeting of the Hurt [VfeSiey ' Electric; Power fßoard las,t <-w«ek, the Engineer-General Manager (Mr E. F. Hollands) presented the following report: — "I have the honour to present the Tentative Statement of Accounts and Balance Sheet for the year ending, March 31st 1900, for your consideration . and approval. The conditions that existed prior to -. the change of management have made the preparation of this Statement somewhat difficult, and comparisons against the previous year's trading cannot be taken as the true position. It must be understood that the-accounts have not bee* audited ana your approval will be' snbjeet to the Audit Department's v clearance. The method of preparing the accounts is in accordance With the Audit Department's requirements, and the Power Board Act. A special report will be prepared dealing with the details of the Capital expenditure during the year under review, j and #he estimates for .1930-31, together with statistical report and comparisons. f3?» clarify the statement of accounts a*4 balance sheet before you, we pro-, : pose to briefly go through the accounts. Capital Account. —The details of expenditure under this heading.show that the sum of £24,970/11/3 was expended. "This sum for capital works; compared jritk the previous year ££36,121/275) shows a decrease of £11,150/11/2. The proposed' estimated expenditure for capital works as presented to the Board -dated 11th June 199 allowed for a sum of £32,000. Two >items in this estimate have not been carried out: (1). Trcntham Substation £7000. (2).., Increased Office, Garage and 'Mete* accommodation £1500. iThe' first under a modified scheme, is now i.n progress, and the second s is in hand, for consideration. New construction will always be in evl■dence with the development of the Board's area to provide for extensions, -additions, etc., to cope with growing Joad and our natural increase of conrsxtmers. ' '■ ' :'': " ■; . ■ Loans. —The position as regards the Xioans is ,somewhat involved. No. 3 Loan (authorised £150,000), of which £120,000 has been raised has been overspent as per statement of receipts and payments by £2,937/12/8. On this Loan £30,000 has yet to be raised, with this amount and 10 per ; cent additional, would be available for con-" atructional pm-poses. 3STo. 2 section of rjSa. 1 Loan represents financial assistance to consumers, and now stands'as follows: — Balance as per statement of receipts and payments of £21,617/13/2 plus advances to consumers outstanding. 'of £7,207/0/1, making a total of £28,824/13/3 leiss £2,937/12/8, leaving a balance of £25,887/0/7, the bulk of -which is now available for general constructional purposes. It appears possible that further capital need not be raised cluring the present financial year. The amount advanced to consumers for the year was £2,039/13/5 and the amount repaid, £4,202/7/11. ; ■•! Income and Expenditare.-r- The Board's undertaking shows considerable \ ' progress financially, as will be seen from" the statement before you- ; On the revenue side, the year's operations represent £98,602/1/8 against £76,825/6/1 for 1928-29, being an in- j -crease of £21,776/15/7 or 28.3 per cent. Several items under expenditure' are not j ... ;-vv ami others explained under •subsequent headings. In passing, we might mention that the balance to nett revenue account for 1929-30 represents £39,520/16/10 against £34,097/12/8 for 1928-29 being an increase of £5,423/4/2. Bulk Power Purchases. —The increased maximum demand for the year under review has resulted in an increased payment of £9,620/19/7 to the Public Works Department. Summarising the figures, the position is aa follows:— ; . 1928-29 £24,209/4/-; 1929-1930, £33,829/3/7. Increase £9,620/19/7. Per cent plus 39.7. We have already reported on the -question of control over our maximum Remand. This matter cannot be rectified until we receive our full bulk supply • from the new Belmont Substation of thia Jjtyblic Works Department.

This was the subject of a new agreement with the Pubjie Works Department, recently approvel. by the Board.

Depreciation and Reserve. —Depreciation has been allowed for on the value of assets in accordance with the Public Works Department Regulations, and Audit Office requirements.

The totals allowed for depreciation are lower than provided for in 1928-29.

This has been brought about by a further dissection of plant and equipment under the various headings.

We have provided for depreciation, reserve a sum of £8,691/0/3. We consider that sum should be set aside annually for replacement of depreciable assets, especially we would -mention the present offices of the Board. This could "be termed a renewals reserve. By this method a* fund could*be established that could be readily accessible for any putpose. ■ , ■ We have also provided that a sum of £1800/5/8 bo written off'the Capital Account under " Management and General.' This amount is made Up of a number of sundry items, under preliminary expenses., . ;, ..,; ... _..:■■'. ~■■■.' ■'■ ■• • ' Bad and Doubtful Debts. —You will '■ gather from the statement of ' 'Income and Expenditure" that a sn'm of £2,750 has been /provided for under this heading. It.ds* not our intention to write this imoiiiit oil' but .to provide an estimated sum that will cover the washing up of consumers* lodgers over the, past five ■years.- An- internal' office system is feeing put into operation whereby it may be possible to pick up a number of outstanding arrears. The whole of the bad and.'■■doubtful- debts■Vare being transferred to a separate ledger. It will be generally understood that the major portion if the amount will be irrecoverable. Range Grants. —Grants made to range consumers amounted to £636 as against £435/17/9 for the previous year, an increase of 4(5.2 j)er cent. Th etotal grants under this heading now represent £3,071/19/2: i : ' . Nett Profit.—The actual profit for the -■T ll- under review represents £10,482/3/1 Of this sum, the following amounts have been appropriated, Sinking Fund Reserve £2,140; debenture redemption £1,582/16/3; renewal reserve £2000; bad and doubtful debt reserve £2,750; preliminary expenses written off £1,800/5/8 • balance increase to nett revenue £209/1/2. Total £10,482/3/1. ■;;■' ■Stock Values.-^The' value of stocks on hand at the 31st March represented £14,067/6/10 against a value of £9,673/12/6 held at the 31st March, 1929. ■/• The''stocks held are far .in excess of our requirements and instructions have been issued that this amount, is to be substantially reduced during the present year. It is our intention to curtail purchases for bulk stock, and to concentrate on available stocks where suitable. , ■

General.—- Certain administration changes haye been effected during the last few months, wliieh will, on ; completion^ place the Board's Office system on sound commercial lines.

. We refer particularly to the installation of; addressogxaph and mechanical bookkeeping machines. Part of the equipment ordered- has/been delivered' and is 1 now in operation,' the balance we expect' to receive in approximately three months.

The transferring of the system from the old to the new will be a slow oper- J ation, as the Board V activities' have to be kept moving.

Whilst we wish to report good progress, there still remains a large amount of work to be carried out "before the Board's records, are complete. This refers especially to the Consumers' Advances Account.

Further .'information will be available when the statement of accounts and balance sheet are under discussion.

. Conclusion.—l wish to express my appreciation of the staff! in my endeavour to pull up the arrears, making it possible under adverse conditions, to' present the statement of accounts and balance sheet in time for the annual meeting.

The chairman in moving the adoption of the report stated that the capital expenditurefrom loan account for the year was £24,970/11/3 which shows a decrease of £11,150/11/2 by comparison, with the previous yeaTs' outlay. The balance of available loan money, including advances to consumers £7207/0/1, is £25,887/0/7, and it is confidently anticipated that this amount will enable the present year's operations to be carried out without the necessity of raising further capital, although should necessity arise, the Board has power under authorisation already obtained, to borrow a further £45,000. From a revenue point is is gratifying to note the continued prd-

gross of the Board's operations, the revenue for the year being £98,602/1/8, which showsV an increase of £21,776/15/7 or 29.5 per cent, while the balance carried to nett Tevenue account is £39,520/----16/10, being an increase^ of £5,423/4/2 over the previous year. ,

The cost of power, purchased advanced 39.7 per. cent—-a Blight decrease- by comparison with previous year's cost which showe&i 50.6 per cent.

For the fiTst time through careful arrangement of the various accounts, the Board has this year earned an amount of £907/7/6 by investing sums of money which have in the past Tieen allowed to remain idle. After allowing for certain fixed standing charges, incluoing provision for depreciation £8691, the balance available in the nett revenue account is £10,482/3/1 which is the actual profit for the year j an increase of" £4,468/5/3, and. same has been- allotted for appropriation in the following manner:— - " :'. ■;"■-' 't' ;.'■. ■:,-■•■ ' . (Sinking fund reserve £2140; debenture redemption £1,582/16/3; : renewal reserve £2000; preliminary expenses £1800/5/8, and bad debts reserve £2750, permitting £209/1/2 being carried to ' nett revenue. The practice of granting assistance to consumers on range connection amounted to £636 auring the year. The total amount granted in this reached the substantial grand total of £3,071/----19/2. In this connection I feel the money has been well expended as it enabled the Board to build its load more speedily, which object being achieved the Board lias .-now" ..withdrawn the special concession. ...■ .',"'■.■ . i Consumers increased from 8247 to 9521 throughout the year, an increase of 15.4 per cent. . | Complete statistical reports f rom ;the General-Manager will be available for the next Boa;rd meeting.; i I feel that the operations for the year I miiigt be! considered satisfactory. . MemI bers; and the .public will probably view with alarm the amount provided for bad debts. This- as will be^readily recognised is a contingency, but Unfortunately a I very real one, as owing to unsatisfactory management, which I found in existence on assuming chairmanship, arrears had [been allowed to accumulate, and will in all probability be lost. The amount allotted is 'confidently expected to cover all outstandings eventually found irrecoverable. The office and clerical system has been completely reorganised and mechanical bookkeeping and adding machines installed and) necessary safeguards taken to obviate re-oecurreneea. In I hope that this item alone will be evidence to the Board's consumers of the undoubted necessity for the precautionary measures taken by the Board in its new schedule to protect itself should necessity arise where accounts are not paid on due date, after the necessary tolerance has been jpermitted. Collection (Sepots, which I have advocated since the Board commenced supplying current ,in the various districts would in my opinion, not only be of assistance to consumers by providing means permitting quick and an easy method of I settling 51 accounts, but also prove an economic factor-to the-BoarQ, and lam hopeful that the Board will sanction a 'scheme shortly to be put before it for the establishment of such depots.

Mr E. F. Hollands, Engineer-General-Manager, took charge of the Board's operations in December last, whilst Mr

Hathaway, accountant, commenced duties in February, These two officers have had a very strenuous time picking up arrears

and straightening affairs both technical and clerical, but have succeeded in putting the Board's affairs in such shape as is confidently hoped will enable considerable progress to be reported' next year. The new rate schedule and conditions operate this month, and while a substantial reduction has been made generally, the General-Manager is satisfied that the rates will prove more equitable to both consumers and the Board.

I have to thank the members of the Board for the assistance and support accor<ied me aa chairman throughout my term, also to the executive and general staff. I feel I am' correct in voicing the opinion that the Hutt Valley Power Board's field is prospectively the richest of any in the Dominion .and that by careful management in the future it should be possible to adjust the rates again at no distant date to the benefit of consumers. It was resolved that the balance sheet and Engineer-Qeneral-Manager's report be received and that same be considered and diealtwith at the Boards's next meetingto^eJ^d on sth June.;