London’s Trams

Sun (Auckland), Volume 1, Issue 85, 1 July 1927, Page 9

London’s Trams

Loss of £114,629 For Year "The present position of the undertaking is not as satisfactory as could be wished, and the immediate future, pending the reduction of repayment charges u\on the expiration of loan periods, must be regarded with some apprehension,” stated the district auditor, with regard to (the L.C.C. trams in his report on the council’s accounts fpr the year 1925-26. He added that unless early recovery takes place in its financial results, the burden of the rates is likely to be more serious. The net debt on the tramways, the report stated, was at March 31 last year £9,111,699 2s 2d.. Capital expenditure during that year was £182,358 7s 4d. The total income on'the revenue ac - count amounted to £4,262.699 10s 2d, and the working expenses to £3 946,220 16s 7d. The income increased by £11,814 18s Id. notwithstanding a decrease in expenditure of £111,349 Is 3d, and the surplus on working was £316,478 13s 7d, as against £193,314 14s ,3d in the year ended March 31, 1925. The number of passengers carried during the year showed an increase of approximately 9,000,000. Income on the net revenue account amounted to £42” ''So 18s 6d, including the surplus baiance on the gross "revenue account, and was insufficient by £114,629 0s 7d to meet the debt charges of £496,019 6s lOd, and other sundry expenses amounting to £43,645 12s 3d. This net deficiency on the year’s trading operations of £114,629 0s 7d. compares with a similar deficiency of £278,441 Is 3d in the accounts of the previous year. "There are two important items in the composition of this deficiency,** comments the auditor, "which do not relate to the normal working of tthe undertaking during the year.under review. One is an amount of £87,391 18s credited in respect of adjustments of income tax overcharged in previous years, and the other the sum of £55,419 -Is 4d debited in respect of arrears of war service allowances. Apart from these items, therefore, 4 the year’s deficiency would have been k £146,601 1*» 3d, and it must be re-

membered that this figure would be approximately £300,000 higher, but for provision not having been made in the accounts, following the course adopted in the previous year, for repayment of that part of the capital expenditure incurred up to March 31, 1924, which is subject to a 25 years' term for redemption—a temporary relief from these debt charges which has been approved by H.M. Treasury on the understanding that the 25 years’ term is shorter than the probable average life of the assets, and that there is, consequently, a surplus of provision in the sinking fund which, in the circumstances, can properly be drawn upon. • There is no statutory requirement as to the provision of a depreciation or renewals or other reserve fund. Although such funds were in existence before the war, they became exhausted in 1919-20, and it has not since been found possible to revive them. The net cost of renewals for the year under review—viz., £269,972 2s lOd was charged direct to revenue account.