574 



Options form a charge which will allow the option-holder to 

 come in and share the future prosperity of a company ; and this, of 

 course, can only be done to the detriment of the holders of the 

 shares already issued. In making the calculations it has been 

 assumed, therefore, where shares stand at a premium, that the options 

 will be exercised. But they have been valued not at the price which 

 a buyer might be expected to pay on the Stock Exchange for a call of 

 shares, but only as the option affects the financial position of the 

 company and its present shareholders — that is to say, if £l shares are 

 quoted at £l 5s, it has been assumed that the option is worth 5s 

 (equal to £1 share, nothing paid). 



After the average price per acre which the investor is paying for 

 the whole planted estate has been ascertained, a further detailed 

 calculation has been made to apportion the price rateably among the 

 older rubber and the younger rubber, according to age. It is suf- 

 ficiently obvious that rubber which is now in bearing (yielding, it may 

 be, a net profit of £150 to £200 per acre) is very much more valuable 

 than immature rubber, which may not come into bearing until after 

 famine prices have disappeared. No attempt has been made to show 

 what the rubber possessed by any company is actually worth ; but, 

 for the purpose of maintaining a fairly correct ratio between the 

 values of planted land of differing ages, a scale has been adopted such 

 as is in use by professional rubber valuers, and the market price of 

 the shares has been made to decide what is the market valuation of 

 each year's planting according to the scale referred to. 



A concrete example of the results obtained and of the thorough- 

 ness with which the table has been prepared may be given b> examin- 

 ing the position of the Lanadron Company. According to the last 

 balance-sheet, the assets and liabilities (after making the necessary 

 adjustments for shares since issued, calls since paid, and for the 

 purchase of Hollingbury) were as follows : — 



Liabilities. 



Capital at par 

 Creditors ... 

 Dividend for 1908 



£ 



269,780 



5,443 

 20,071 



295,294 



Assets. 



Cost of estate, develop- 

 ment, buildings, etc. ... 

 Cash and realisable assets 



208,369 

 86,925 



295,294 



The £l shares, however, are quoted at 4%, and the market valuation 

 of the estate may be shown by the following adjusted balance- 

 sheet : — 



269,780 shares at 4% = 



Creditors 



Dividend for 1908 



£ 



1,315,177 

 5,443 

 20,071 



1,340,691 



Market valuation o f 



estate 



Cash and other assets . . . 



1,253,766 

 86,925 



1,340,691 



