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SALES MANAGER'S REPORT. The Sales Manager, State Coal-mines, to the UNDER-SECRETARY, Minos Department, Wellington. Sir,— New Zoaland State Coal-mines, Head Office, Wellington, 31st July, 1919. I have the honour to present the annual report and balance-sheet of the New Zoaland State Coal-mines for the year ending 31st March, 1919. Financial. The net profit for the year, after making full provision for interest, depreciation, war bonuses, bad and doubtful debts, and all annual charges, amounted to £30,607 Is. 4d., made up as follows :— £ s. (1. Point Elizabeth Colliery .. .. .. .. ..14,663 7 (i Liverpool Colliery .. .. .. .. .. .. 20,140 0 7 Soddonvillo Colliery (recovery) .. .. .. .. 646 Hi 5 Sale of hulk.. .. .. .. .. .. .. 1,701 3 0 37,151 7 (i Less losses. d. Depots .. .. .. .. 6,451 1 I Highway robbery .. . . . . 89 I) I Briquette Account . . . . .. 4 5 0 6,544 6 2 £30,607 1 4 The net profit earned represents a return of 8-16 per cent, on the gross capital expenditure to date, and is equal to 10-47 per cent, on tho total turnover for tho year, which amounted to £292,238 9s. 9d. In comparison with the figures for last year there has boon an increase of 1-36 per cent in the profit earned, and 2-55 per cent, computed, on the turnover. Reviewing the financial results for the year it will be noted that the Point Elizabeth Colliery has made a profit of £1.4,663 7s. 6d., as against £23,572 os. 3d. for last year, a decrease of £8,908 12s. 9d., due largely to the decreased output consequent upon the gradual exhaustion of tho mine. The Liverpool Colliery shows a net profit of £20,1.40 os. 7d., as against £4,825 10s. 9d. for the previous year, an increase of £15,314 9s. I.Od. on the year's working; but in this connection it must not be overlooked that in the accounts of this colliery for the'year ended 31st March, 1918, £7,064 was written off as representing the book value of tho bins and screening plant destroyed by a landslip in January of that year. It will thus be soon that tho relative increase in tho net earnings for the year under review would have amounted to £8,250 9s. lOd. when the, £7,064 written off, as already mentioned, is taken into consideration. As full information relative to tho production and prospects of the State mines is set out in detail in the report of tho Manager of the State Collieries it is sufficient for mis to confine my remarks to the financial result obtained. With regard to the depots, it will be seen that tho operations lor the year have resulted in an aggregate loss of £6,451 Is. Id. In my two previous annual reports 1 directed special attention to this phase, and recommended that in view of increased shipping freights, general working-expenses, salaries, &c, tho retail price, of household coal should be increased in order to enable tho depots to show a reasonable margin of profit over working-expenses, but so far nothing has boon done in this connection, as it was considered inadvisable to increase the price, of coal to householders during the, period of the war. In the case of the collieries, however, the increased cost of production and other increases have, boon met by a revision of tho selling-prices f.o.b. Groymouth, so that they have boon enabled to continue lo show a reasonable return on the capital, invested, while on the other hand the retail portion nf the business has during the past three years been bearing largo increases in transport, operating and overhead expenses, without passing any proportion of same, on to household deliveries. It will be seen, therefore, that if the depots aro to Iks worked at a profit the retail price, of coal for domestic use must be substantially increased, and in this connection it may be, mentioned that the retail prices of similar coal range from 15s. to 18s. per ton in excess of State coal prices The decreased output of the Point, Elizabeth Colliery has resulted in reducing the allocation to the do [lots from. 47,000 tons in 1917-18 to 27,000 tons for tho past year, which illustrates the difficulties which have been experienced in endeavouring to cope with the increased demand occasioned largely by tho low price of State coal in comparison with competing coals of tho same class. It will thus bo seen that the retail portion of the. Sjate Coal Department has been bearing an undue proportion of tho increased o.i.f. price charged by the collieries, and owing to no corresponding increase having boon made in the retail selling-price through the depots, as recommended by me in the reports for the two previous years, it has not boon possible to avoid showing increased losses in the working of the depots, which, moreover, will continue, until steps are taken in the direction already indicated. Owing to decreased and irregular supplies frequent stoppages have taken place in the taking of orders at tho depots, as,tho demand for coal has always largely exceeded available supplies.