A SURPLUS OF £8,888

Sun (Auckland), Volume IV, Issue 982, 27 May 1930, Page 1

A SURPLUS OF £B,BBB

Transport Board's Finance

BUSES LOSE BUT TRAMS PAY

rIE result o±‘ the operations of the Auckland. Transport Board for the year ended March 31 last is a profit of £S,SBB, according to the annual financial siateinent brought down today. The gross profit on tlie tramways service was £193.303. and the loss on the omnibus service was £IB.OOO. leaving for the combined undertaking a gross profit of £175.297, out of which payments and appropriations totalling £ 160.40 b have been made leaving the credit balance stated.

The bus loss mentioned represents the gross loss, but the net deficit (allowance being made for depreciation and similar charges) was £42,504. This, however, shows a reduction on the loss for last year, which amounted to £46,556. “The balance sheet and accounts now presented cover the first complete year of operation since the formation of the board, and I am sure the board will note with satisfaction that the result is a net profit of £B,BSS,” said the chairman, Mr. J. A. C-. Allum. “Full provision has been made for payment of interest and sinking fund both on old loans and new capital raised during the year for authorised extensions, and also for the accident fund reserve, suspense accounts and depreciation. “Early in the financial year the ratepayers approved the board's policy of development of the undertaking, and the extension works thereunder were put in hand with the minimum of delay, and their prosecution has had a material influence on the unemployment situation in Auckland. It is confidently hoped that the continuance of the work on extensions now authorised, together with further proposals which the board will place before the ratepayers at a later date, will enable the board to continue to relieve the situation by employing labour on reproductive works,” the chairman continued. CUTTING BUS LOSSES “It must be pointed out that although the tramway extensions are being carried out with commendable promptitude, yet none could be completed in sufficient time during the past year to show any material financial relief to the omnibus services which they replace. There will, however, be very considerable relief during the current financial year. “The traffic receipts totalled £666,252, which is £42,145 less than the previous year. Certain omnibus services were discontinued. The cessation of these services accounts for approximately £15,000 of the reduction in revenue. "The weather during many of the week-ends and also during the Christmas holidays in the period under review was particularly bad, and had an adverse effect on the receipts. The reduction in revenue has been arrested, and there is every prospect of an improvement. “By exercising economy and by readjustment of services, there has been the substantial reduction of £46,051 in expenses, which has more than compensated for the reduced revenue. A perusal of the items of expenditure discloses the Important part the board's undertaking plays in the life of the community. Wages and salaries paid to the traffic staff alone totalled £247,563. while the total wages and salaries paid'were £359,674. The bill for electric power amounted to £75,593. and rates totalling £5,122 were paid to the various local bodies in the board’s district. WHERE GROSS PROFIT WENT The gross profit of £166,408 (representing the combined effect of tram and bus operations referred to above) was disbursed as follows: Interest on loans, £98,025 1 Ss 2d; sinking fund, £40,476: depreciation on omnibuses, £14.836 11s 7d; transfer to accident fund reserve, £5,670 11s 7d; annual provision for writing off discount on loans and loan Rotation expenses, £1,800; track newals, “suspense account,” £2,871 8s 6d; motor omnibus, “suspense account.” £1,559 Os lOd; alteration to offices, £600: preliminary expenses, Auckland Transport Board formation. £369: total, £166,408 10s Bd. This leaves the net profit of £S,BSB referred to. Mr. Allum said that interest and sinking fund show increases over the previous year of £2,294 and £2.501 respectively. These were due to new* loan issues for the extension works and it could be emphasised that all interest and sinking fund was paid out of revenue. SINKING FUND RISING The sinking fund now totalled £493,055, the whole of which sum was invested outside the undertaking and

I would be available to redeem the ! board s debentures as they lall due. The first debentures (.£1,250.000) fall due in 1940, when the undertaking j would be relieved of interest and sinking fund amounting to no less a sum ■ than £95,920 annually. The sum allocated for depreciation of omnibuses provided for the fiual ! writing off of the 105 vehicles taken ; over under the provisions of the ; Motor Omnibus Traffic Act 1926. These vehicles no longer appeared on the books and the total amount written off on their account during the past ■ three years was £50,175. The board was relieved of this expense for the future and this item alone would have | a material influence on the cost of operating omnibus services. In 1926, in order to assist the unemployment situation, the City Council raised a loan of £IOO.OOO for tramway track renewals. On the engineer's certificate 40 per cent, only of the value of the work done was treated as capital expenditure, aDd the balance of 60 per cent, charged to “suspense’* and was being written off out of revenue over a period of 20 years, i The amount, £2,871, appropriated this j year is the fourth, the total sum ; written off being £10,236. It must , be borne in mind that in addition to : the foregoing, adequate provision was i being made for a sinking fund to rc- ! deem the loan on maturity, Air. Allum i stated. CHARGE ON REVENUE “The Motor Omnibus Traffic Act, j 1926, authorised local bodies to raise a loan to pay for omnibus services acquired under the compulsory proI visions of the Act. Rather than take I advantage of this authority and raise* a loan, with consequent interest and sinking fund payments over a rela- , tively long period, the City Council decided that the cost of acquiring the j omnibus services in Auckland should i be met out of revenue in the shortest reasonable time,” said Mr. Allum. “The ! motor omnibus proprietors claimed that they should not be paid on the i value of the physical assets alone, but j that they should be compensated on ! the basis of fleet value, and this claim i was in part upheld by the Court, The j difference between the value of tht» i physical assets as determined by tho board's expert advisers and the actual amounts awarded by the Court could only be treated as ‘goodwill.’ “It was therefore arranged that tho value of the vehicles themselves should be written off out of revenue over a period of three years and this has been done. It was further arI ranged that the amount of ‘goodwill,* £15,590 9s, should be written off over a period of ten years, and the sum ! of £1,559 now allocated represents the | third instalments, the total amount appropriated to date being £4,677 2s | Sd. Although the vehicles have been | written off those remaining have still j some value and arrangements are being made to dispose of them. It is i recommended that all sums received ' from such sales should be credited jto the ‘Motor Omnibus (goodwill) j Suspense’ account.”

FINANCES IMPROVE The financial position of the trans* ; port undertaking had shown a pro- | gressive improvement during the past : three years, and there was every indication that the improvement would j continue. The tramway extensions • were being prosecuted vigorously and | had recently enabled 21 buses to be withdrawn from service. The tramway extensions were giving satisfac- ! tion to the public, and the withdrawal ! of the omnibuses would represent a : considerable saving. The opening cf further tramway extensions will permit the withdrawal of more omnibuses during the current year.

i “During the past three or four years ! I have had the privilege of twice ■ travelling round the world, and as the j result it was open to me to observe rhe transport problems in various ; countries,” remarked the chairman. “Three years ago violent controversy j existed between the tramway and ! omnibus interests, but it is now a]>parent that co-operation has taken the place of the former hostility and rela- | tions between the respective interests are more harmonious.” ACCOUNTS ALL CLEAN ; The balance sheet was adopted on : the motion of Mr. G. Baildon. ! “We must congratulate ourselves oil ! the fact that the accounts have come j back from the Auditor-General without ! any tag attached,” said Mr. J. A. CAllum. “They have been passed clean.'* Air. M. J. Coyle said that it reflected credit on the board’s officers. “Wa • have shown a credit balance of almost ; £9,060,” he said, “and the public has i rot been penalised, except for the 1 in the price of concession cards, which • the public minded very little. Xeverj theless, it helped us considerably. Our ! services, I believe, are quite satisfac- | tory.”