To the Editor of the Norrit-CxiNa Datty Nzws."
'Sm,—Presumably one explat cof the use of the editorial "we the fact that an editor is really a sort of composite and ambidexterous Jerson whose left hand knows not What his ight hand write th? At any rate, this would serve to ex-Plain' your footnote to a recent Correspondent's letter (in which you stated that the "automatic was Working quite satisfactorily, thank you!"—or words to that effect) and Your decidedly unfavourable com Imont in yesterday's editorial under the caption of "The Telephone Since publication of Mr. Anson's report the general public and the shareholders have been made aware tinder way group interested telephone development. to. ascertain upon what terms the neces-Ts, 6,000,000 or more of new Capital can be provided. Undoubtedly this must entail the complete Seorganization of the Company—probably an outright sale, placing Control inthe hands of those: pro Viding. the money-—but before this comes to pass T would like to ask fellow shareholders to consider A few points.
1. At the present moment the Company belongs to. the shareholders, and the Directors are aerely' their nominees.
A necessary reminder to parties!
2, The Anson Report is such a damning docament—sueh a monde ent to the past ineficieney and: incapability of the Directors—that would seem sheer folly for the shareholders to sit quietly by and Jeave all the reorganization arrangements in the hands of the same men. If they were really a self-respecting ady, they would brave called a shareholder's me immediately after the Report published, given. some explana how the Company had into such a. precarious. position whilst under their charge, tendered their personal apologies, and handced in their resignations-—or at least tasked for 'A. vote of confidence! 'The nearest they got. to this. was to get their friends to vote them Sneteased Dixectors' fees at the last 3. The Anson Repoxt draws attention to. the fact that "about 'Tis, 8,000,000 has been appropriate ed to depreciation' and in acton with arrangements that wen' to understand. the Council Approve the money has deen absorbed by the business and is therefore not available at the present time for the purpose for. which it was intended."" Perhaps this i not so serious og it might at first ap-'Pear, but one cannot ignore the inference that #0 long as the Dircefors arranged matters with the Council, the shareholders need not be consulted, nor even informed!
Liabilities include Tls. 567,696 in respect of Staff Superannuation, Provident and Benevolent Funds, whilst the Assets show only Tls. 291,810 securities set aside under the' same heading. Should not these Staff Funds be regarded as Trust Funds and be covered by investments to the full amount? Apparently the balance of Ts. 275,886 has (together with the Depreciation Reserves) been "absorbed by the business."
5. One of the gentlemen now investigating the Company's position is quoted as saying that most of the apparatus, outside cables, materials ete. which figure largely in the Balance Sheet as Assets, must (from the point of of anyone considering the provision of new capital) be regarded rather as Liabilities, owing to the cost of conversion, scrapping, ete. involved, The values of the land owned by the Company appear in the last Balance Sheet (March 31, 1929) as follows:—
Balance at March 31, 1928 additions daring' the year Total at March 31, 1929., 372,991.60
The -assessed value of the land registered in the Company's name in the 1927 S.M.C. Land Schedules is as follows:—
Central District Northern District Di Total ose.
I do not know whether any land was purchased during 1927/8 but it is evident from the above figures that (unless there have been any not reported to the shareholders) land of which the assessed value is Tis, 256,207 appears in the Balance Sheet at only Tls. 135,906. This latter figure is probably less than 25 per cent, of the actual market. value at present time! Tiere is nothing against these "hidden reserves," but, in the view of the gentleman already quoted (seo & subra) the Company's land holdings are amongst its most important tangible assets;~and therefore, if the shareholders are to be asked shortly to consider the sale of the Company, it is essential that the Directors furnish some up-to-Gate details of the Company's properties in order that a better appreciation of what is owned may be arrived at.
Apropos of pars. 3, 4 and 6 subra, one {S constrained to ask whether the muditor's certificate to the Balance Sheet is really satisfactory in the case of a public company like this? I do not wish to question the integrity of Messrs. Lowe, Bingham and "Matthews (which is of course, unimpeachable) but sometimes it would be very interesting and informative to the sharcholders—on whose behalf the auditors are really employed—ig some of the "information and explanations" which the auditors obtain from the Directors before giving the certificate could be passed on in the printed reports. The use of Trust Funds for ordin: trading purposes is scarcely first-class finance, and the shareholders are certainly entitled to be advised by the auditors when values stated not approximately correspond with the intrinsic value of the property in question, Cannot a Committee of Shareholders be formed in Srder to study more closely the Company's position and also any scheme of reorganization which may be put for~ ward? If something is not done, the shareholders will probably wake up one morning to read in the press. that their property has passed from them.
Tam, ete,
Text read from the printed page and cleaned; old type leaves the occasional error.