82a["State Steamers", The West Australian, Wednesday 17 December 1913, page 7]
THE FINANCIAL POSITION.
TOTAL LOSS £19,395 7s. 11d.
INTERESTING DEPARTMENTAL REPORT.
A report and balance sheet relating to the State steamships was presented to the Legislative Council yesterday by the Colonial Secretary. In submitting the document, the Minister said that it had not yet been passed by the Auditor-General, but it had been examined by his officers. It showed the financial position of the concern up to June 30 last, and though it was scarcely the correct thing, as he could not produce the Auditor-General's certificate, it would afford the information which he had promised to supply to members at an early date.
The report, which has been compiled by the Departmental accountant, states that the result of the transaction of the steamship service shows a loss on trading of £9,646 3s. 5d. to which must be added interest, $3,718 11s. 5d., and depreciation and replacement, £6,030 13s. 1d., making a total loss of £19,395 7s. 11d. "In making these statements," the accountant proceeds, "every conceivable charge against the service has been included, and in certain cases the year's transactions have borne costs which might reasonably have been spread over the working of future years...
The loss of £19,395 7s. 11d. can therefore be stated at a figure which will stand the criticism of the most ardent pessimist.
82b["State Steamers", The Western Mail (Perth, WA), Friday 26 December 1913, page 12]
BALANCE SHEET ANALYSED.
(By "Ardent Pessimist.")
The report and balance-sheet of the State Steamship Service, which was presented to Parliament on Tuesday last, deserves the grave consideration of all who have the interests of the State at heart. The figures, according to the departmental accountant who compiled the report, will stand the criticism of the most ardent pessimist. Will they stand the criticism of keen business men and heads of shipping firms who, unlike the general public, know the true value to be placed on the figures set out in the financial statement? It is apparent from the capital value shown against "steamships" that the cost of alterations to the Western Australia has been capitalised. As it is very doubtful whether the steamer has increased in market value to the extent of the cost of these alterations, it would have been wiser to have charged the amount direct to profit and loss account in full, or nearly so. The only legitimate proportion that could have been capitalised would be the cost of additional passenger accommodation that might increase the steamer's earning capacity. In commercial circles the ambition is not to unduly inflate the capital values of assets; the tendency is rather to reduce values to within a margin of safety. The Government steamers, after allowing for depreciation, are valued at £96,600. In shipping circles it is very much doubted whether the Government would realise £50,000 for their fleet if a sale were decided upon. If the latter figure is a true value of the fleet, the losses should be increased by £46,000.
Depreciation has evidently been allowed for at only 5 per cent. Leading British shipping companies calculate for financial purposes that a new steamer must be written down to a break-up or selling value in 16 years at most. From a shipowner's experience it is, therefore, absurd to allow 5 per cent, on old steamers, standing far in excess of their true value in the Government books, i.e., at about twice their actual value.
The public would like further particulars of "stock on wharves and in stores, £1,971." "Stores on vessels, £1,857," also seems high when we bear in mind, that provision is made for uncompleted voyages, and this figure should represent the value of stores on board at the time of the termination of the last completed voyage and included in the profit and loss account, when stores would be very low. And was depreciation allowed for on tapestries, etc.? It would also be interesting to know when and by whom the stock was taken as so much controversy has taken place with regard to the State steamers' accounts.
To ascertain the true financial position of the State Steamship Service let the capital value of the fleet be placed at £50,000, which is a very liberal estimate, as shipping men competent to judge will admit. The stores may be accepted at the value shown in the balance-sheet. No provision seems to have been made for possible bad debts, although some of the items, such as claims against insurance companies, are of doubtful value. However, let the value as stated be accepted. The position is then:--
Liabilities as per balance-sheet £127,163 13 2
To which must be added the
loss for the year .. .. .. 19,395 7 ll
Giving a total liability of .. .. £146,559 1 1
To meet this our assets are--
Steamships .. .. .. .. .. .. £50,000 0 0
Stores on vessels and wharves .. 5,030 9 7
Sundry debtors .. .. .. .. .. 6,043 7 4
Office furniture .. .. .. .. 99 ll ll
Total .. .. .. .. .. .. .. £61,169 8 10
The above figures work out at a dividend of, roughly, 8s. ld. in the £. If further losses have been incurred since June 30 last, even this small dividend would not be realised.