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CARLISLE CORPORATION'S ACQUISITION OF LOCAL SERVICES
Page 132
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Important Financial betails are Explained in the City Treasurer's Report IN connection with the decision of Carlisle Corporation to purchase the local tramways undertaking, including the assets of the Carlisle and District Transport Co., Ltd., and of Percival, ttd., at £32,500, and to purchase the Carlisle and District Motor Services, Ltd., at 129,000, a report by the city treasurer explains the position clearly.
Under two contracts the corporation would acquire, for the sum of £61,500, the statutory powers of the tramways concern, with the right which those powers give to the corporation under the Road Traffic Act, 1930, to interest itself in the operation of buses, the physical assets of the tramways undertaking and of Percival, Ltd., including the fleet of 14 buses, and 29 buses of the Carlisle and District Motor Services, Ltd., not to mention goodwill.
It is thought that the purchase price is justified as a consideration for securing by the only practicable means (a) the dominating position as regards the -operation of road passenger-transport services within the city ; (b) the 1)62
power to decide the time and manner of discontinuing tram services, if found desirable ; and (c) a strong position to make satisfactory, arrangements with companies operating long-distance motor services passing through Carlisle . and services connecting the city with outlying parts. The confirmation of the provisional purchase contracts has been recommended mainly on these grounds.
The question of the return which the corporation may expect on its expenditure has been another factor in this recommendation, and it was found that the three undertakings are at present receiving a combined gross traffic revenue of about £65,000 per annum. The ,report states that an assumed earnibg at the rate of is. 3d. per bus-mile and an assumed operating cost of 1s. per mile show, on the basis of a gross traffic revenue of 165,000, a profit of £13,000 per annum. The Carlisle and District Transport Co., 'Ltd., however, has given its 'view that the operating costs per bus-mile should not exceed 10d. and it is even suggestedthat a revenue of 1s. 6d, per car or bus-mile might be, expected. 'Again, there is the possibility that by co-ordinating the three services the corporation may be able to increase the, earnings per vehicle-mile.
In relation to the estimated immediate earning of 113,000 net per annum consideration has been given to the probable amount of charges which would fail upon the corporation for contribution to sinking fund and interest, and it has been assumed that, in addition to the purchase price of £61,500, further outlays may be entailed in respect of' the purchase of new vehicles, etc., amounting to about 120,000, an allowance of £5,000 being made for possible expenditure upon the adaptation of buildings and the acquisition of plant The total annual charge for sinking , fund , and interest is computed at 112,064.