General Motor Cab Co.
Page 3
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The directors' report and accounts for the year ended the 31st July, 1910, were before us a week ago, but we then merely gave the bare figures. Now, after (lose examination of them, we can only conclude that the somewhat gloomily forecasts as to this company's prospects, which we made in our issue of the 16th December, 1909, when reviewing its 1909 results, were fully justified.
At a passing glance, the balance sheet DOW before us looks very good. A sum of £201,000 appears on the credit side, and, after liberal deductions from the amounts standing against. Provincial Motor Cab Co., Ltd., Preliminary Expenses, and Teaching and Suspense account, and the payment of a 7 per cent. dividend on the preferred ordinary shares, a balance 41f 1,71,753 2s. is carried forward. This. added to last year's balance of .C92,735 13s. rid., showing the very-gra Lifying balance of 1;94,488 15s. 5d.
What we eannot understand, however, is why the allowance for depreciation is so small. We certainly thought. when the eompany issued its original prospectus and had its first meeting, that the Chairman made it quite clear that the intention was to reckon the life of a motoreah at ix years and to allow de preciation iicenrdingly. Whilet such nssessment may not be over conserva tive, it izt any rate reasonable. Butt what do we find in the balance sheet F Only £79.465 set apart on rollingstock valued at L1,087,850, or a trifle tinder 71 per cent., thus reckoning the life of a cab at over 13 years, and this is not all; we suspect that the debentures valued at £66,680 must have been redeemed either from depreciation—last ,year's credit balance, or from monies received for cabs sold. Of course, we may be mistaken, but it is difficult to see how they could have been purchased from the credit balance of £1;753 2s. which is carried forward this year. Had depreciation of 16.7 per cent. per annum been allowed, as was originally promised, and had the debentures been redeemed from other sources, the balance sheet would have read somewhat as follows : or a loss of £46,463 before working off anything for preliminary expenses, Provincial Motor Cab Co., and Teaching and suspense account, or paying any dividend at all
Granted it may not be reasonable to expect that company to redeem £400,000 in six years out of profits, and granted there is no reason why it should not buy its own debentures out of the rolline-stoek depreciation fund, we submit, with till seriousness, that a company which has so to redeem its debentures, thus further intrenchineepon an already-inadequate reserve, is in no position to pay a 7 per cent. dividend on its shares. Last year's credit balance was t83.000 ; this year's. with a lareer menher of cabs. is -C1.700. What will next yenr's be