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Liabilities. £ s. a. Capital: Is the amount paid by shareholders £170,000 0 0 Debentures, due in June, 1908 : These will have to run out, as they are payable to bearer, but the New Zealand Government, if it thinks fit, will from time to time be able to buy with advantage on the market ... ... ... 680,000 0 0 Sundry Creditors : Are debts due by the company. The amount is very small, owing to the company being financially strong... 3,834 7 2 Debenture Interest: Is due to debentureholders, and was paid on due day ... 8,500 0 0 Balances available for Dividends: This sum could have been divided among shareholders, but in order to keep the company prepared for any contingencies which may arise, it has, as a matter of prudence, been kept in reserve ... ... ... £27,634 0 5 Not available for Dividends : Is also a reserve. It adds to the abundant security held by debenture-holders. The two sums— £27,634 os. sd. with this £51,290 os. 7d. —amount to £78,924 Is., and represent what belongs to shareholders after paying all liabilities, apart from the increment derivable from the unsold land ... £51,290 0 7 £941,258 8 2 Balances as above ... ... ... ... ...£78,924 1 0 In addition to which, should the line be taken over in accordance with the agreement, there would be 10 per cent, beyond valuation, say ... ... .. ... ... £81,206 0 0 And land and works handed over when the contract was signed ... ... ... ... ... ... £42,116 0 0 £202,246 1 0 The company is practically trustee for the Government, who have a right to take over the line by giving twelve months' notice and paying whatever may be awarded by arbitrators. lam aware this would be subject to the power of purchase under the Eailways Construction Act of 1881. You may not, however, know that some large sums for keeping the line in efficient condition, free from depreciation, have been applied for that purpose in anticipation of the line being taken over, the particulars .of which can no doubt be obtained from the directors. The dividends and reserves were as follows :— February, 1892 ... ... Dividend, 3J per cent., £5,950. Eeserves, £4,055 1893 ... ... „ 5 „ 8,500. „ 3,500 1894 ... ... „ 5 „ 8,500. „ 7,000 1895 ... ... „ 6 „ 10,200. „ 6,553 1896 ... ... „ 6 „ 10,200. „ 7,169 1897 „ 6 „ 10,200. „ 8,443 1898 ... ... „ 5 „ 8,500. „ 9,000 1899 ... ... „ 5 „ 8,500. „ 4,788 1900 ... 5 „ 8,500. „ 6,342 £79,050 £56,850 I was doubtful about giving the amount of reserves, and have therefore thrown it on directors. If, as a compromise, the terms were 6 per cent, compound from the commencement in 1883 to 1892, during which time no dividend was paid, it would still further simplify matters and come to nearly the same thing, as we received 5 per cent, in five years and 6 per cent, in four years from that date. In the light of the best information I can obtain, I do not think it at all likely the award would be less than the amount stated in the balance-sheet, plus 10 per cent. My present object is not to go into debatable details more than can be avoided, but to follow up the purport and the spirit of my interview with you to which I have alluded. With this in view i have consulted with some of the largest shareholders in this country, and after considerable difficulty induced them to fall in with the idea we discussed in Wellington. That is to say,— The Government taking over the railway, land unsold, mortgages secured on land already sold but not entirely paid for, book-debts, cash—in short, the entire undertaking—and assuming all the liabilities as shown in the last balance-sheet and down to date, in exchange for £170,000 paid by shareholders, with 6 per cent, compound interest thereon from the commencement up to date of settlement of purchase, after deducting all dividends received with 6 per cent, compound interest.