Please wait. Contacting image service... loading

Article text

THE FREEHOLD INVESTMENT AND
BANKING COMPANY.
THE FINANCIAL POSITION.
Tho position of affairs in regard to this insti
tution has engaged tho attention of the direc
tors during the last few days, and they have
decided to issue tho subjoined circular to tho
depositors : —
217 Collins-street. Molbourno, 30th January, 1892.
Dear Sir, — With uxtrumo regret tho directors of
this company, after long and careful consideration,
liavo decided to lay tho following request boforo tho
depositors.
1 ho company, sinco Its formation over nine yoars
ago, has carrion on until lately an ever increasing
business, to tho satisfaction of its numerous cus
tomers, and with ovory prospect of continued
success.
Tho tinancial strain, however, which began somo '
months ago in an abnormal withdrawal of deposits
from so many institutions severely taxed its re
sources ; but when It was able to withstand tho
pressure which in Novoiubor and Doceinber caused
the suspension of a number of building societies
and banking companies the directors hnd good hopes
that ere this a return of confidence genorally would
liavo enabled It to regain much of tho lost ground
nnd considerably strengthen its position. Unfortu
nately these hopes liavo not been realised, for
though tho outlook, appears more promising, tho
withdrawals of maturing deposits are still
so numerous that tho directors feel that
to continuo to provide for their repayment
at the prescut time would bo prejudicial to the
interests of tho great body of depositors.
They therefore consider it their duty, in order to
conserve the interests of all concerned, to ask de
positors, ns has beon done iu the case of other
institutions, to ngreo to an cxtousion of tho
period of their deposits for three yoars from the
due dates. \
Thoy "propose to pay interest for tho presont
terms at the rates shown on tho receipts, and for
the extension at 6 per cent per annum, but pending
the result of the replies to this letter it will be
necessary to defer all such payments.
Tho directors are convinced of the ability of tho
company, if time be allowed, to meet every obliga
tion, as its properties are of such a nature that,
under normal conditions, they should be steadily
realisable at satisfactory figures.
They no also convincod tlmt the Adoption of the
plan here proposed will prove much more conducive
to the interests of depositors than the alternative
of liquidation, which would be prejudicial to realisa
tion. especially under existing circumstances, and
would, of course, entail the entire cessation of pay-'
mont of interest.
Buuding the resumption oi payments, the direc-,
tors will not permit any transfers of shares detri
mental to tho depositors' interests, and of course'
will not recommend any dividend to tho share-.'
holders.
I encloso form of Agreement for renewal of your '
deposit in the tertu9 above set forth, and trust you
will kindly sign and return it promptly, as delay, -
would frustrate tho proposed arrangement, and £
am sure bring about ono less advantageous to de
positors.— I am, yours faithfully,
T. It. B. Morton, Secretary. '
It should bo explained that about 20 of tho'
circulars were issued yestorday, and tho .
recipients attended at the bank and readily
sigucd an agreement to extend the period of
their deposits for thrco yenrs from tbo duo
dates. Tlio direotors of the institution have
noted- wisely . in taking the depositors
into .their confidouco at the earliest
possible moment, for they havo nothing'
,to concoal thai would in any way nffeot con-
i fidonco in ono of the oldest and most prominent r
j investment and- banking companies in the
colony. As a matter of fact it is the fore
runner of all the similar institutions established;
during the "land boom " period, and conse
quently the greater number of its properties'
wero bought when tho value of land was
much lower than that reached during the
height of tho "boom." In thoso circumstances
the institution occupies a strong finanoinl posi
tion, as the properties, mostly situated in Mel
bourne, stand in the books at such a figure
that even if they were realised upon iu the pre
sent depressed state of the market thoy would
return a good profit on the purchase money and
incidental expenses up to tho present timo. On
the 27th October last an ordinary genoral moot-
ing of) shareholders was hold, when the follow
ing direotors' report was submitted and
adopted : —
Yout directors havo the pleasure of submitting
tbe report and statement of accounts for tbe half-:
year ending 31st August, 1891.
During tho period embraced business generally
has been extremely inactive, but a better tendency
is now manifest, and with the prospects of a bounty
ful harvest and an unusually largo wool clip a .
steady all round improvement may be antici
pated.
Tbo balance at credit of profit and loss account :
amounts to £21,792 9s. lOd , which it is proposed to'
appropriate in the following manner : — '
Dividend at 8 per cent, per annum on
permanent shares .. £10,784 13 2
Dividend at 8 per cent, per annum on J
. terminating shares 655 5 0
Proportion of extra profits payable on +
terminating shares (equal to Is. 2d.
per share) 34 13 0
To credit ot general reserve fund .. 5,000 0 0'
Making tbo total £105,000, and tho
total of the two reserve funds,
£195,000. %
Balance to next half year .. .. 5,317 18 8'
, £21 J92 9 10
Tho directors desire to thank tho shareholders for-
their cordial co-oporation in the past, tnd would
solicit a continuance of their kind assistance in pro
moting tho interests of tho company.
J. Baiitlett Davies, :
Managing Director.
The financial position of affairs was indioated
in the following balance shoot t
STATMENX OF ACCOUNTS AT 31st AUGUST/
ir'. 1891
(Including London Office Accounts to 20th July,:!
And approximately to date). '
Profit and Loss Account.
Dr. '
To expenses of management-
Including salaries, directors' and
auditors' fees, advertising, sta
tionery, <£c., in Melbourne and
London £4,760 0 7:
Balauco ... M .. .. 21,792 9 10
£26,552 10 5
Cr!
By balance from last half year .. £5,556 16 6
Premiums on shares .. .. 510 13 4
Gross profits.. .. M « 20,485 0 7
£26,552 10 6
Balance Sheet. i
- capital and liabilities.
Capital subscribed—
66,138 shares of £25
each .. .. " .£1,653,450
Capital paid—
6027 shares, contri
buting . . £6,352 6 8
57,465 shares paid up
to £3 10s. . . 201,127 10 0
73 shares paid up
to £5 .... 365 0 0
2573 shares paid up
to £25 .. 64,325 0 0
66,138 ,271.169 16 8
Amount paid on ter
minating sliams .. 14,697 10 0
Genoral reserve fund 100,000 0 0
Dividend roservo fund 90,000 0 0
Profitnnd loss account
—Balance 21,792 9 10
Total capital .. ..£497,659 16 6
Amounts payable on
properties .. ..£104,07010 10
Deposits and accrued interest in Melbourne and
London—
At call and overdue,
£14,974 4s. 2<1.; fixed
for terms undor 12
months, £10,602 6s.
2d.: do. from I to
10 years, £1,355,443
3s. 3d 1,381,019 13 7
Drafts in circulation 40,736 13 9
Other liabilities .. 272 7 3
Total liabilities Z ' I" 1,526,099 5 5
£2,023,759 1.11
Pronortios £870,237 8 6
Othit investments 97,000 0 0
Loans and balances owing on sales.. 916,643 4 6
Rents duo by tenants .. .. 5,490 19 8
Money at call and short
notice in Melbourno
and London.. ..£101,675 0 7
Cash in banks and in
hand iu Melbourne
and London.. .. 32,912 8 6
134,487 9 . 3
£2,023,769 1 11
T. It. B. MORTON, Secretary.
We hereby certify that wo havo examined tho
books aud vouchers of tho company for the half
year ending 31st August, 1391, and compared them
with the above statement of nccouuts, and find
the same correct. .
ED. PERCY HASTINGS, F.T.A.V. \AuAuMB
HENRY BROCK, J Auditors.
Melbourne, 16th October, 1891.
It will bo seen from tho foregoing statement
that on 31st August last tho assets of the com
pany show that tho money at call and short
notice in Molbourno and London was £101,575,
while tho oash in banks and in hand was £32,912,
making a total of £134,487. The money at call
and overdue amounted to only £14,974, and for
fixed terms under 12 months £10,602, whilo
that having a currency of from 1
to 10 years, the nvorago beiug 3£
years, was £1,355,443. This clearly shows
that the institution was in a fairly
strong position, and that the directors wore
justified in dcol&ring a dividend at tho rate of 8
per cent, on permanent shares and a similar
amount on terminating shares, placing £5000 to
tho general rcscrvo fund, making tho total of
the two reserve funds £195,000, and carrying
forward n balance of £21,792 to tbo. next half
year. Since then, however, the difficulties th&t
have encompassed many other institutions
have affected this one materially, henco
the action of the direotors. Tho exten
sion proposed , means practically . an
informal liquidation, in which the interest of
tho depositors will be in every way protected,
while if things improve tho company will bo
able to recover if s position and resume
full business without unduo detri
ment to the interest of the shareholders.
Sucli an arrangement will, besides avoiding un
necessary depreciation of properties, also causo
a minimum nmount oi disturbance to
other institutions. The directors aro hope
ful that at tho end of three years tho stato
of business will improve to such an extent as to
onnblc tho company to resume repay incuts in
the ordinary way. In fact, this may
be accomplished beforo tlio expiration
of tho term specified. As nn evidenco
of tho high appreciation iu which the company
is held in London it may bo stated that not
withstanding tho financial uneasiness which
existed in November and December last a largo
sum of money was paid into the London
offico by English depositors. Tho soundness of
the instil ution has always been recognised, and
the succoss of its operations has beon shown by
the regular dividends that havo been paid to tho
shareholders, in some instances as high as 22
por cent.
$