BOROUGH COUNCIL.

Manawatu Herald, Volume XXXI, Issue 603, 30 November 1909, Page 3

BOROUGH COUNCIL.

PURCHASE OF GAS WORKS. PROPRIETARY’S OFFER REFUSED. The adjourned special meeting of the Foxtou Borough Council, to consider the proposal to purchase the gas works, was held in the Council Chamber last night. There were present; Crs. Speirs (in the chair), Adams, Levett, Gibbs, Ross, 1 Rimmer and Robinson, The Mayor (Mr G. H. Stiles) was also present but left before the discussion ended. The reports from the accountants appointed to audit the Proprietary’s books (Messrs Kember and Son) and from the Town Clerk (Mr A. Fraser), also the agreement drafted by the Proprietary for the sale of the works to the Council were read and discussed in committee. The reports were as follow : ACCOUNTANT’S REPORT. According to instructions contained- in your letter of 26th October, we have ascertained the cost of the Foxtou Gas Works, according to the Books of the Proprietary, to be as shown in attached schedule, viz.; 4s. The first item, /7500, was a cou ‘ tract entered into, virtually by one portion of the Syndicate with another and therefore, the actual cost is not disclosed. The allocation of wages, 19 s 2d, by the Manager, being simply his own adjustment, we have no means of verifying. The item Purchases from Contractors, I 7 S sd> is under an agreement dated the 20th September 1909, and then could have been merely stock on hand and we have no proof of the material having since been converted into plant. On the showing of the cost, 4s, the offer by the Syndicate, of the Works to the Council for we consider too expensive and would strongly advise the Council not to entertain the present offer but to await events as we consider the position will not be prejudiced by time and would suggest your Council grant us power to make use of opportunities, we feel sure will present themselves, of .ascertaining full particulars of costs etc., which may lead to the saving of many pounds to the Borough. Cost of Works of the Foxton Gas Proprietary as shown by the books on 30th September, 1909; £ s d Contract price paid to Norwood and Pearson for erection of works & site thereof 7500 o o Cost of additional area of land 1 70 0 0 Purchase of additional plant, etc., 168 1 5 Proportion of wages allocated by manager for additions to plant, etc., 191 19 2 Consulting engineer’s fees 66 13 6 Interest at 6 1 / 2 per cent, on overdraft during erection 134 3 2 Purchases of material from contractors under agreement dated 30th September, 1909 144 17 5 Expenses incurred by members of syndicate prior to opening of works 35 9 4 Total ,£B3ll 4 o TOWN CLERK’S REPORT. “ In accordance with a resolution of the Council I proceeded to Wellington, and in company with Mr Oscar Kember, of the firm of Kember and Son, the auditors selected by the Council, I went through the books and vouchers of the Foxton Gas Proprietary for the purpose of ascertaining the cost of the Foxton Gas Works. The 1 main cost is hid in a contract let to Messrs Norwood and Pearson for £7300 for the complete erection of works, including site, and an additional 4s is made up by various items in the books, such as; Services and mains, meters, plant, controller boxes, engineer fees, etc., etc., making up the cdst, as shown by the books to 4s ; in addition to this sum Mr Read, the Chairman of the Directors, has added the sum of ,£366 for interest, material used, which he says has never been charged, and a further sum of for contingent work, such as new services, etc., making the cost up to at which silm the Proprietary are prepared to sell, and have signed an agreement to that effect, and which is attached to this report, Messrs Kember and Son and myself are of opinion that the price asked is considerably more than the actual cost of the works, as in going through the various receipts we found, the English cost of the plant from Messrs Newton and Chambers was ,£3385 5s nd while freight and duty amounted to £730 making a total of ,£4115 5s nd, Trevor and Son contract for erection of retort house was ,£4OO, the site cost ,£370, and say for labour and supervision for erection of works and mains, of ,£lll4 14 id (in order to keep to round figures) would bring the, cost of the works to ,£6OOO and, which I believe is a fair estimate of the actual cost. It is admitted that at the present time, the works are not paying interest on the capital invested. On the other hand if during the next two and a half years, the concern could show a profit after paying interest on capital, then the works might cost the ratepayers more than the price asked at present. I have gained a certain amount of information, which perhaps does not

come within the scope of this report, but I shall be pleased to answer any question on the subject.” In answer to questions the Town Clerk said that the contract was let to Messrs Norwood and Pearson for site and erection of works at .£7500 of which was for goodwill. The works started with 76 meters and the present number was 115. The total sales for the first year were 9s 2d, and the working expenses totalled £37 1 8s i°d, leaving a profit of ,£252 os qd. Interest on cost, ,£9200, at 6 per cent, is ,£552, and after deducting the profit, there is still short of interest on capital. If in two and a half years time the works can show say £ xoo profit after paying interest on capital it would add roughly some to the price to be paid, which would be actual cost of construction, without any addition lor goodwill, and no charge for freehold site. After some discussion Cr Ross moved that this Council cannot see its way clear to purchase the gas works at the price offered, but that it be a recommendation to a future Council to acquire the works at the end of the first five years and in accordance with the terms of the concession. This was seconded by Cr Levett and carried unanimously.