THE ASSETS REALISATION BOARD. (COPY OF GENERAL MANAGER'S REPORT FOR THE YEAR ENDING 31st MARCH, 1898.)

Appendix to the Journals of the House of Representatives, 1898 Session I, B-15b

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1898. NEW ZEALAND.

THE ASSETS REALISATION BOARD. (COPY OF GENERAL MANAGER'S REPORT FOR THE YEAR ENDING 31st MARCH, 1898.)

Laid on the Table of the House of Representatives by Leave.

GENERAL MANAGER'S REPORT FOR YEAR ENDING 31st MARCH, 1898. Wellington, Ist July, 1898. I have again the pleasure to submit the balance-sheet, profit and loss statement, and report for the year ending the 31st March, 1898. Although not up to our last year's figures, we have, I consider, taking into account the very severe climatic conditions of the past twelve months, done extremely well, as a comparison of this and the preceding year will show. 1897. 1898. Station properties ... ... .. ... £56,336 £43,296 Sundry properties ... ... ... ... 6,897 6,659 £63,233 £49,955 I have had prepared, and attach, full explanatory statements of the various accounts. Statutory Contbibution by Bank of New Zealand. Under the statute the bank has to pay us out of its profits £50,000 per annum. There has accrued due to the 31st March, 1897, as under: — To 31st March, 1896 ... ... ... ... ... £50,000 To 31st March, 1897 ... ... ... ... ... 50,000 £100,000 of which the bank has paid up £75,099 19s. lid., leaving a balance of £24,900 os. Id. This, together with the amount accruing due on the 31st March, 1898, £50,000, I understand the bank will shortly pay over to the Board. The debenture interest to the 31st March, 1898, amounted to £92,992, provided for as under :— From Board's profits ... ... ... ... ... £36,362 From balance bank payments (received and accrued) ... ... 64,327 £100,689 Showing a surplus over amount of debenture interest of £7,697 available towards probable deficiencies. Eealisations. The realisations for the twelve months (including sale of the Eangiatea and Okauia Estates made to the Government, but not paid for until after the 31st March) are ... £79,943 which, together with 1895-96 sales ... ... ... ... 63,219 and 1896-97 sales ... ... ... .... ... ... 147,548 and sales of stock on properties sold ... ... ... ... 19,197 amounts t0... ... ... ... ... ... ... £309,907 distributed as follows, viz. :— Auckland District ... ... .. ... ... ... £61,379 Hawke's Bay District ... ... ... ... ... 1,650 Wellington District ... ... ... ... ... ... 71,147 Canterbury District ... ... ... ... ... ... 138,681 Otago District ... ... ... - ... ' ... ... 34,025 Marlborough District ... ... ... ... ... 3,025 £309,907 the book cost of which is approximately £468,996, leaving a deficiency of £140,656. The land market during the year just past has been decidedly more brisk, with an upward tendency in prices. The improvement has, however, been more noticeable in wheat-growing lands than in such property as forms the bulk of our country assets.

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Town properties have been inquired for, especially in Auckland, where we have succeeded in placing a fairly good proportion at enhanced figures. During the year we have held auction sales at the following centres : — £ Waikato, 26th November, 1897, realising ... ... ... ... 1,767 Auckland, 27th October, 1897, realising ... ... ... ... 7,504 Christchurch, 26th April, 1897, realising ... ... ... ... 4,654 Dunedin, 30th April, 1897, realising ... ... ... ... 5,924 Dunedin, 18th March, 1898, realising ... ... ... ... 19,476 Timaru (Eskbank), 20th April, 1897, realising ... ... ... 7,852 Total ... ... £47,177 There is still good demand for small suburban allotments at Auckland. Our Surrey Hills Estate, Auckland, continues to move off satisfactorily. At Dunedin, also, there has been fair inquiry, but for sections in Musselburgh, where we have our largest and most valuable holding, there is a lull, which is partially due to the recent breach in the sand-hills, with slight inundation of the low-lying land in the neighbourhood. I anticipate, however, renewed demand at an early date. Considering the stagnant condition of the land market during the past three years, for only two of which has the Board been in actual control, I consider the realisation to have made good progress, notwithstanding the opinion to the contrary expressed by public men. It must be remembered that the amount realised is to be compared not with the amount at which the properties were taken over, but at the actual value, the respective amounts being,— Per Cent. Book cost, £2,731,706 ; proportion of sales to cost ... ... ... 1T36 Estimated value, £1,879,105; proportion of sales to estimated value ... 1651 Station Peopebties. The result of the working, whilst not up to that of the previous year, is, considering the adverse season and the sale of the Arowhenua and Albury Estates, which were large contributors to revenue, very satisfactory, the profits available for the year being £43,318 3s. 6d. After adding reclamations and deducting surpluses on the previous year's produce shipments the actual amount earned is £42,748 10s. Id. The following is a comparison embracing the period since the institution of the Board, stations since disposed of being omitted : — 1896. . . i p fi t Equal Per Cent. Equal Per Cent, on Actual rront. on Book - oat _ Mr _ Foster . g Valuation. £ 37,000 ... 2-28 ... 360 1897. 54,822 ... 3-37 ... 5-29 1898. 42,749 ... 2-62 ... 4-13 Showing for the period referred to an average profit of £44,847, equal to 275 per cent, on book cost, and equal to 4-34 per cent, on my valuation, as compared with the average of the whole time the Estates Company held it of £27,504, equal to L6B per cent, on book cost, and equal to 2-66 per cent, on my valuation. It will be seen by reference to the station balance-sheets that only in one instance have we failed to make a profit, and in this instance the property was small and could not be worked to a profit when all labour had to be paid for. The place has since been sold. The working-expenses for the two years ending the 31st March, 1898, omitting stations disposed of, were as under :—

Particulars. 1897. 1898. Permanent improvements ... Eenewing pastures, &c. (20 per cent of which is charged to Profit and Loss Account each year) Depreciation in implements and furniture Cost of turniping ... General expenses, wages repairs, rates and taxes, &c, including feed Bent and interest... Babbiting Grain growing for sale £ 4,841 11,003 £ 8,260 9,244 1,046 15,641 39,766 1,783 2,191 660 1,125 15,093 37,796 2,269 1,204 567 Total ... Deduct expenditure on permanent improvements 76,931 4,841 75,558 8,260 Actual cost for year ... ... ... ... ... 72,090 67,298

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Working-expenses are still kept as low as is consistent with the proper management and maintenance in profitable order of the properties. It has been said that our estates are being allowed to run back. This is not the case, as our operations are planned to turn over every inch of our cultivated ground in from five to seven years, besides which we are manuring heavily and taking nothing but wool and mutton off the country. In addition to this, we are, as may be found desirable, bringing in further areas of land hitherto unremunerative.

Sales of Stock. The following is a comparison of realisations for the two years ending 31st March, 1898:— Sheep.

Note, —1898 : The value of frozen meat is estimated.

Cattle.

Note.—1897 : Estates since sold are omitted.

Our sales have, owing partly to the disposal of the Arowhenua and Albury Estates and part of Eskbank Estate, been less by 43,827 sheep, but comparing the sales on the stations we are at present working there is an increase of 9,929. Cattle show a decline on last year's rates of ss. per head, thus affecting profits as compared with last year to the extent of £959.

Stock on Hand and Valuations at 31st March, 1898.

The valuations of sheep stand practically as at March last year. In the North, market-values have held somewhat better than elsewhere. In the South, under forced sale, prices were depressed, but for good stock with holding capabilities values kept firm. Cattle values have not been so fortunate, an estimated decline over all of 2s. lid. per head having been provided for, or £3,224, which added to the reduced amount on sales, &c, £959, would, had prices remained at last year, have enhanced this twelve months' profits by a total of £4,183.

Year. Number sold. Net Proceeds. Average. Number frozen. Net Proceeds. Average. Total disposed of. Net Proceeds. Average. 1897 62,216 23,247 s. d. 7 6 18,434 8,029 s. d. 8 8 9 7 80,650 90,579 31,276 s. d. 7 9 1898 67,379 24,129 7 2 23,200 11,105 35,234 7 9

Year. Number sold. Net Proceeds. Average. 1897 ... 1898 ... 3,606 3,836 20,761 21,078 £ s. 5 15 5 10 d. 0 0

1897. 1898. No. on Hand. Valuation. Average. No. on Hand. Valuation. Average. Sheep. North Island South Island 203,183 149,071 87,794 48,797 £ 0 0 s. 8 6 d. 7 7 192,454 141,543 83,075 45,556 £ 0 0 s. d. 8 7 6 5 Totals 352,254 136,591 0 7 9 333,997 128,631 0 7 9 'attle. 21,351 71,039 3 6 6 22,111 70,284 3 3 7

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Wool Clip.

Net Return for the Two Years.

Note.—Stations disposed of are excluded.

Lambing.

Mortality.

Comparison of Operations for Year.

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1897. 1898. Sheep shorn. Lambs shorn. Average per Fleece. Sheep shorn. Lambs shorn. Average per Fleece. 300,282 17,084 Lb. oz. 7 4 2 10 298,263 20,727 Lb. oz. 7 14 2 4

1897. 1898. Net Weight. Net Return at Port of Shipment (excluding Insurance). Equal per Pound. Net Weight. Net Return at Port of Shipment (excluding Insurance). Equal per Pound. Greasy Scoured ... Lb. 1,866,251 180,569 £ 53,762 6,980 d. 6-91 9-27 Lb. 1,979,878 227,462 £ 57,214 8,399 d. 6-93 8-86 Totals ... 2,046,820 60,742 7-12 2,207,340 65,613 7-13

1897. 1898. -m .. „ ™ Lambs cut and Ewes to Ram. Percentage. I Ewes to Ram. Lambs cut and tailed. Percentage. 111,441 86,496 79 113,712 j 94,239 83

Sheep. Cattle. 1897. 1898. 1897. _. 1898. »ead and missing. Per. Cent. Dead and missing. D n . Dead and „ „ Per Ce,lt - missing. Per Cent Dead and -,, ., missing. Per Cent ' 22,501 6-45 19,810 5-62 773 3-62 699 3-27

Tu tips. I Grasi dng. Oats. Oaten Hay. £ i 1 « *3 3 O I feb a 'o a 93 a Year. Rape. ! Bush. Acres. I per Acre. Tons Acres, per Acre. Without Grass. With | With Grass. ! Plough. Surfacesown. "5 ft 897 .898 Acres. 1,901 2,979 Acres. 10,467 10,487 Acres. 3,283 4,140 Acres. 13,465 11,178 Acres. 2,023 4,29£ 1,426 950i 20 26 1,312 2,001 4 Chains 262 814 Acres. 557 1,151 Acres. 1,347 3,876 Chains 664 1,589 increase... 1,078 20 857 2,276 6 689 1 2 552 594 2,529 925^ decrease... _',287| 475

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Geneeal. / The past year has been one of anxiety from the continued want of rain and consequent scarcity of pasture. Prices for fat stock have also been very low, and our profits thereby affected. The wool market has suffered very serious decline, especially in respect of coarse crossbreds, but lam in hopes that values will improve later on. Changes of fashion affecting consumption of special products, such as wool, are apt to have severer effect on such produce at the first than is warranted, and recovery to a greater or less degree usually ensues. During the year we have been successful in the part we have taken as to reducing charges of various descriptions which are so seriously felt whilst prices for our products are so very low. The prospect of the land market is none too encouraging. Whilst there is good demand in the South for wheat-growing land, we have but very little of this class of country. For the greater portion of our country assets, which consist of medium pastoral land, there is not great demand in large blocks. Small settlers are, however, taking advantage of the Land for Settlements Act, which offers advantages to farmers and men of limited capital which we as a realising company cannot emulate. Taxation. We have paid land- and income-tax for 1897-98, £9,925 17s. lid., assessed as follows :— Land-tax on debentures to the amount of improved value of land, £ s. d. £969,133 at Id. ... ... ... ... ... 4,038 1 1 Graduated tax on £606,067... ... ... ... ... 5,050 11 2 Joint interest, &c. ... ... ... ... ... ... 46 6 8 Income-tax on interest of debentures to the value of £451,986 = £15,819 at Id. ... ... ... ... ... 790 19 0 £9,925 17 11 Amount paid 1896-97 through Estates Company ... ... 7,130 0 0 Excess for 1897-98 ... ... ... ... ... £2,795 17 11 The unimproved value of our land is £606,067, and we should only be called on to pay ordinary and graduated tax on this unimproved value of our land, plus mortgages, and not be charged at all on debentures. On this basis for the above period we would have been assessed as follows : — Ordinary tax on land .. ... ... £606,067 s. d. „ mortgages ... ... 32,056 £638,123 at Id. = 2,658 16 11 Graduated tax on £606,067 at 2d. ... ... ... ... 5,050 11 2 £7,709 8 1 which is some £500 or £600 in excess of the amount paid by the Board through the Estates Company for 1896-97 —viz., £7,130 —but for this period certain concessions under the hardship clauses of the Act were granted to the Estates Company in respect of its debentures, which reduced the assessment. Under the Land- and Income-tax Act we could be assessed for the full amount of our outstanding debentures, but the Commissioner decided to only assess us on so much of the debenture-money as was used by the bank to retire outstanding debentures of the Estates Company and Auckland Agricultural Company. This was approximately £1,011,000, but owing to a misconception on the part of the department the amount was estimated for 1896-97 at £1,421,000. Even at the less sum we should pay in excess of our liability if assessed on our land only as set out above. I take it that the intention of the Legislature in passing the Act of 1895 was to give relief to the bank, as provision was made that no stamp duty should be chargeable on transfers of properties from the Estates Company. I should therefore assume that the imposition of increased taxation under the financial clauses of the Act is decidedly in opposition to the spirit of the intentions of the Legislature, if not of the letter of the Act itself. Under the present system of taxing debentures the disposal of our properties does not relieve us except to a limited extent. If we sell a property, say, for cash, we are relieved from land-tax on the taxable value of such property, but we are assessed for income-tax on the interest of a similar sum. I therefore consider that the Government should be approached with a view to fixing our limit of taxation on the unimproved value of our land and mortgages and exempting our debentures altogether from taxation; also as to refunding amount paid in excess of what we should have paid on this basis for 1897-98. Another point that tells against us in paying on debentures is that our land is assessed as mortgaged land and the land-tax calculated on the improved value, instead of the unimproved value.

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This excess is equal to 4s. lOd. per cent, on the value of improvements, which are over 50 per cent, of unimproved value, thus:— Unimproved value ... ' ... ... ...' ... ... £606,067 Improved value ... ... ... ... ... ... 969,133 Difference ... ... ... ... ... ... £363,066 4s. lOd. per cent, on this is equal to, say, £875. Staff. I have nothing special to report in this connection further than that the officers have in all cases carried out their duties efficiently during the past year. Waltee G. Fostee, General Manager. Approximate Cost of Paper.— Preparation, not given ; printing (1,400 copies), £i 17s.

By Authority : John Mackay, Government Printer, Wellington.—lB9B.

Price, 6d.]