Some Accounts Presented

I have already reported at some length on the position regarding the Student Travel Bureau in an earlier Salient, and the only thing that is worth adding at this stage, was that STB's Annual Accounts for the period ending 31 March 1978 were presented showing a profit of $17,000. Not of course that that represents any money in the bank, or dividends to NZUSA (the shareholder), there are still a few debts outstanding, around $200,000 worth. However the profit in the 1977/78 financial year lends credence to the directors' claim that STB Ltd may well be declaring dividends within four years (the profits in the following years are expected to be considerably larger than this year's). So it seems that STB is on the way up. It was remarked that this was probably the first profit that STB had ever made.

NZUSA's accounts for the year ended 31 December 1978 were also presented to Council. They were not quite as encouraging as STB's. At 31 December last year, NZUSA's balance sheet showed a net deficit of about $10,000 (ie its liabilities exceeded its assets by that amount). Because of the vagaries of accountancy, this figure is a little bit gloomier than the real situation. The real situation is that NZUSA's deficit is actually about $3,000 (chicken-shit!). However NZUSA is compelled to live with this unpleasant fact of life until STB comes alive, at which stage the balance sheet will rapidly begin to improve.

The reasons why an improvement in NZUSA's books depends on STB's recovery is due to the relationship between the two organisations. Firstly we own STB and have shares listed as assets, valued at $100 (which some might think excessive for a company that has presently $200,000 of debts). Once STB comes right (ie solvent) these shares can be written up to their real value, $50,000. Furthermore, many of the debts on NZUSA's books are to STB, and these debts cannot be repaid until STB starts declaring dividends. So the balance shed looks bad, but once STB comes into its own, it will dramatically improve.