Sept,  i,  iSge.j 
THE  TROPICAL  AGRICULTURIST. 
163 
The  Ceylon  and  Oiuental  Estates  Company. — 
This  is  the  successor  of  the  Investment  Corporation, 
and  the  reorganisation,  whicli  was  effected  in  1892, 
left  traces  of  the  old  troubles  in  the  balance-sheet. 
With  £153,2  29  of  paid-up  capital,  there  were  no  less 
than  £100,0  00  of  six  percent  Debentures  out,  which 
debentures  had  been  issued  at  £15,000  discount. 
The  expenses  of  the  reorganisation  were  .£3, .509,  while 
a deposit  of  .£,35,56  with  the  New  Oriental  Bank  had 
been  locked  up  by  the  failure  of  that  institution. 
Meantime  heavy  expenditure  had  to  be  faced  in  the 
way  of  outlay  upon  new  buildings,  machinery,  and 
extension  of  tea,  coffee,  and  cocoa  cultivation.  The 
estates  held  formed  one  of  the  most  extensive  areas, 
under  single  control  in  Ceylon  being  11,378  acres 
of  which  4,309  was  under  tea,  and  about  2,000  acres 
under  coffee  and  cocoa,  much  of  the  tea  being  imma- 
ture. The  Board,  however,  has  steadily  pursued  a 
course  of  paying  moderate  dividends  and  writing 
down  the  unsatisfactory  assets,  while  each  year 
£3,500  of  debentures  have  been  redeemed.  By  dint 
of  this,  the  debentures  in  the  last  balance  sheet  were 
reduced  to  £89,500,  the  debentui’e  issue  expenses,  Ac. 
account  has  fallen  to  .£(5,500,  and  the  Oriental  Bank 
deposit  account  stands  at  £716.  The  progress  of  the 
Company  in  this  respect  is  shown  in  the  following 
table  : — 
c5 
<0 
Q 
bo 
c 
55 
n . 
<0  r- 
1892.. 
1893.. 
1894.. 
1895. . 
o 
a 
d 
<0 
> 
d> 
Ph 
03  0) 
<D 
03  d 
a -*-» 
0)  a 
P4  o 
X -o 
iitH  S 
.9  53 
d !3 
o ciM 
£ £ 
36,576  31,453 
36,631  32,622 
39,645  31,6.54 
44,160  34,697 
a 
i S. 
q;i 
3 OT 
P 
03  03 
. 
El 
Q 
. a .• 
CO 
s 
p 
D 
’ritten  0 
benture 
penses. 
ebenture 
and  Ex 
Account 
0) 
>-l  r— 
a 
a 
cu  CT3 
■s  '> 
is 
ft 
P P 
£ 
£ 
£ 
^ % 
5,122 
4,378 
15,770 
100,000  4 
4,196 
1,740 
13,542 
96,000  3 
7,668 
4,042 
10,000 
93,000  5 
9,342 
4,000 
6,500 
89,500  8 
It  is  not  clear  from  the  reports  whether  the  redemp- 
tion of  the  debentures  was  effected  out  of  profits  or 
not,  as  there  was  an  increase  of  £27,000  in  the  share 
capital,  chiefly  Preference  Shares;  but  some  £20,000, 
was  expended  upon  new  extensions,  buildings,  and 
machinery,  while  sales  and  purchases  of  estates  have 
led  to  a nett  increase  of  710  acres  to  the  area  of  laud 
held.  Out  of  the  12,089  acres  now  owned,  5,714  are 
under  cultivation,  5,085  of  these  under  tea.  Some  650 
acres  of  this  last  total  have  yet  to  come  into  bearing, 
and  a fair  share  of  the  portion  now  being  cropped  is 
imraaturei  and  should  give  increased  returns  in  the 
futue.  The  reduction  in  the  debenture  issues  enabled 
the  dirctors  to  reorganise  the  capital  of  the  Com- 
pany this  year,  and  by  issuing  more  Preference 
Shares  it  has  been  possible  to  still  further  reduce  the 
amount  of  debentures,  and,  at  the  same  time,  lower 
their  rate  of  interest  from  6 to  4^  per  cent.  Under 
this  arrangement  the  debenture  issue  will  amount  to 
£65,000,  the  Preference  Shares  to  .£46,320,  and  the 
Ordinary  Shares  to  £55,264.  The  debenture  stock 
is  irredeemable  for  ten  years.  This  arrangement  will 
reduce  the  charges  upon  revenue  considerably,  and,  at 
the  same  time,  profits  ought  to  show  improvement, 
owing  to  the  large  acreage  still  under  mature  plants. 
It  should  not  be  forgotten,  however,  that  the  Com- 
pany has  no  reserve,  while  the  ,£20,000  spent  upon 
buildings,  machinery,  and  extensions  would  have 
been  written  off  out  of  revenue  by  a stronger  com- 
pany, instead  of  beingplaced  to  capital.  Accordingly, 
it  will  be  prudent  to  increase  the  amount  for  de- 
preciation each  year,  so  as  to  bring  the  valuation 
of  the  block  account  back  to  a normal  condition. 
No  doubt,  however,  the  Board,  which  must  have  a 
keen  remembrance  of  management  'utrder  poverty- 
stricken  conditions,  will  see  that  this  necessary  tafk 
is  undertaken.  Even  then,  a moderate  increase  in 
dividends  seems  possible,  if  events  continue  to  favour 
the  Ceylon  tea  industry. 
The  Ceyi.on  Land  and  Puoduce  Company. — This 
Company  was  formed  in  1885  when  the  old  Oriental 
Bank  had  its  first  misfortune.  Ceylon  properties  at 
(hat  time  were  not  favourably  looked  upon,  and  no 
doubt  the  purchase  was  effected  at  a moderate 
price.  A mistake,  however,  was  made  in  pur- 
chasing and  developing  cocoa-growing  properties,  but 
latterly  the  Company  has  turned  the  major  part  of 
its  attention  to  tea.  Dividends  were  small  and  un- 
certain for  some  years,  but  10  per  cent  was  paid  for 
1890  Bird  1891.  An  exceptionally  good  profit  in  the 
latter  year  enabled  the  Board  to  take  in  hand  the 
rvriting  down  of  the  cocoa  properties.  By  that  time 
they  had  recognised  that  these  were  not  worth  the 
money  they  had  paid  for  them,  and,  like  wise  men, 
they  proceeded  to  write  .£8038  off  the  book  value 
of  the  estates  out  of  profits.  Not  content  with  that 
they  have  further  paid  off  a mortgage  of  £15,0C0 
out  of  revenue.  This  was  completed  in  1895.  These 
necessary  deductions  have  been  a considerable  drain 
upon  profits,  so  that  special  allocations  for  the  de- 
preciation of  buildings  and  machinery  have  ceased. 
The  dividend  for  1892  also  had  to  be  reduced  to 
per  cent,  but  since  then  20  per  cent  has  been  paid 
for  1893,  15  per  cent  for  1894,  and  20  per  cent  for 
1895,  The  profits  of  last  year  were  free  from  any 
deductions  to  repay  the  mortgages,  and  the  Board 
took  the  opportunity  to  commence  a reserve  fund 
with  a sum  of  £2,000.  It  would  be  judicious,  how- 
ever, to  return  to  the  custom  of  writing  off  a stated 
sum  each  year  for  the  depreciation  of  buildings  and 
machinery,  and  this  measure  would  be  rendered  more 
instructive  if  it  were  accompanied  by  a division  in 
the  balance-sheet  of  the  value  of  the  buildings  and 
machinery  from  that  of  estates  and  nurseries.  The 
Company’s  progress  during  the  past  six  years  is  set 
forth  in  the  following  table  : — 
bo 
a . 
Oi  0) 
pH 
a 
> 
0^ 
^ CO 
a o> 
Oi 
^ a 
o 
2 ® 
C3  rt 
W 5 
0)  ^ ® 
.S  0>  1-1 
.so 
a uW 
•3  « o 
S a 
fc!  - O 
03  P 
O T3 
- i m 
a 
O M ^ 
.A'73 
> a 
(D 
£ 
£ £ 
% 
555 
5,697  42,997 
10 
9,233 
3,069  39,327 
10 
4,513 
6,119  39,672 
1,.592 
11,192  36,247 
20 
1,039 
4,196  30,810 
15 
2,063* 
8,836  28,760 
20 
189C  29,380  19.925  3,201 
1891  41,  25  21,012  2,811 
1892  33,fi-17  23,215  2,451 
1893  38,890  23,587  2,518 
1894  28,771  21,332  2,194 
1895  35,838  24,735  2,202 
* Includes  £2,000  set  aside  to  commence  a reserve 
fund. 
The  reduction  in  the  interest  paid  upon  debentures 
is  partly  the  result  of  a reduced  rate.  Tea  forms 
the  staple  resource  of  the  Company,  1555  acres  be- 
ing under  bearing ; while  286  acres  of  young  tea  are 
in  process  of  development.  Some  1553  acres  are  also 
under  cocoa  and  coffee,  but  the  revenue  from  this 
source  is  not  relied  upon  for  dividends.  It  is  cal- 
culated that  the  properties  have  been  written  down 
£20,000  by  deductions  from  revenue  in  the  last  six 
years,  and  it  is  probable  that  less  will  be  devoted  to 
this  matter  in  the  future.  The  reserve  ought,  how- 
ever, to  be  further  increased,  and  this  should  give 
the  Company  the  opportunity  to  improve  its  finan- 
cial methods.  At  present,  in  common  with  many 
other  Ceylon  companies,  its  praeCce  is  to  bring  the 
value  of  produce  in  course  ct  realisation  and  pnsold 
into  the  profit  and  loss  account  and  treat  it  as  re- 
venue. Like  “accrued”  interest  taken  as  revenue 
by  a trust  company,  it  is  a device  which  opens  the 
way  to  abuse,  and  should  be  discontinued  by 
strong  companies.  As  corollary  to  this,  we  find 
that  deposits,  sundry  creditors,  bills  payable, 
and  balances  due  to  superintendents  in  Ceylon, 
totalled  over  .£28,000  in  the  last  balance- 
sheet;  while  cash,  debtors,  and  advances  came  to 
only  .£8,200.  This  is  rather  a lopsided  way  of  doing 
business  and  when  revenue  is  anticipated  up  to  the 
hilt,  an  irnforeseen  contingency  might  prove  awk- 
ward. A stronger  reserve  should  provide  funds  to 
remove  this  danger,  and  the  Board  having  acted 
so  vigorously  before,  will  doubtless  treat  this  matter 
with  becoming  energy. 
The  Eastehn  Bkoduce  and  Estates  Comi>anv. — 
Apparently  this  Company  succeeded  to  a poor  heri- 
tage when  it  took  over  the  properties  and  estates 
of  the  old  coff'oe-growiug  concern  known  the 
