AN OVER-VALUATION.

New Zealand Herald, Volume XLIV, Issue 13487, 14 May 1907, Page 6

AN OVER-VALUATION.

ROPE AND TWINE COMPANY;

[by telegraph.— correspondent.]

■ \V Dunedin, Monday. The annual report of Dbnoghy's Rope and Twine Company . states that the year's trading shows a distinct improvement on that of the previous year. Rope sales were several thousands of pounds better than last year, while stocks were kept down almost to a. minimum, and the yearly output increased by nearly 400 tons. The exceptionally dry summer and consequent light crops curtailed the demand for binder twine, which ' was the poorest in the history of the company. . The company's operations resulted .in a net profit for the year of £3661 7s Bd, to which has to be added £289 16s 3d : brought forward from last year, making a • total to credit of £3951 3s lid. •,'.:'-- :■

The board, being mainly composed of new directors looked closely into the question of the value of the company's properties, ; and careful valuations made it clear that the present values are only £36,342 17s Id, instead of £77,055 6s sd, as shown by the books, which leaves an over-valua- ■ tion of £40,712 9s 4d/.;| To meet this very • serious deficiency they proposed toappro-; priate the amount standing at the credit of the profit ; 'and . loss account (£3951 3s ; lid) as well as the '■] following reserves:—Insurance liability account, £1875,; contingency account, £527 16s 9d; employees' accident fund, £382 ss; reserve ;; fund, £6000; dividend equalisation fund, £625; Ihyercargil! boiler account, £222 ,10s and to [carry the balance of ; the deficiency;; £27,128 13s ; Bd, to the: profit ; and loss ; sus-, pense account, to be dealt with hereafter as shareholders may decide. .-<".: ,

Owing to ). the over-valuation, ; shareholders will be :„■ deprived of 'a dividend this year, but.the directors, state that the earning power of the company nis unimpaired; and* they-see no reason why it should not become again' a dividend-paying;-] concern. The outlook for the coming year is- bright, and large twine contracts have already been made at satisfactory prices. ■