EXCESSIVE PRICE FOR SUGAR?

Hawera Star, Volume LIV, 26 October 1934, Page 10

EXCESSIVE PRICE FOR SUGAR?

INQUIRY MAY BE UNDERTAKEN. COLONIAL COMPANY’S FINANCES (United Press Association—By Electric Telegraph * * Copyright). SYDNEY, Cot. 1 20. Questions were asked in the New South Wales Legislative Assembly today regarding the motives of the Colonial Sugar Company, in distributing new shares and increasing the capital. The Minister of Local Government, Mr Spooner, promised to discuss with the Premier the advisability of suggesting to the Federal authorities at the next Premiers’ conference that the financial affairs of the company be m-j vestigated to ascertain whether the j people of Australia were paying an excessive price for sugar. A special meeting of shareholders ot the company yesterday approved a resolution increasing the capital from £7,000,000 to £14,000,000 by the creation of 3-50,000 new shares each of £2O, and clause three of the deed settlement was amended accordingly. Mr E. R.. Knox, chairman, said the directors had decided to capitalise the profits through the creation of additional shares as it was realised that the value of capital assets in the company's balance-sheet was considerably below to-day’s true market value and below the cost of such assets. Consequently the rate of real profit earned had appeared higher than it actuallv was. He assured shareholders every precaution had been taken to ensure that the book value of capital assets after the' revaluation would still provide a margin for reserve, in addition to which the company would retain reasonable trading reserves. The board will submit at the next ordinary general meeting, a balancesheet in which profits derived from the revaluation of capital assets will be shown to the credit of an assets revaluation account and special ieserves account. The board will then recommend the distribution of moneys to the credit of these two accounts, such distribution to be effected by the allotment, of one fully paid new share to every fully paid share held by each shareholder on November 20, when the half-yearly meeting will be held. . . ■lt is proposed to pay an interim dividend and a bonus on November / of 25s per share., . . [Mr Knox emphasised that the capitalisation of trading reserves and the ■ revaluation of capital assets, being purely domestic affairs, would not mI crease the earning capacity of the i company. He assured shareholders that the company should continue to earn sufficient- to provide the payment in May next of 3 1-8 per cent, upon the increased capital, which would coirespond with ■ the -rate of distribution of profits in the past few' years. It is also proposed that a special bonus dividend be paid in November IS&o, in view of the individual liability of added taxation in respect of the distribution.