COMPANY AFFAIRS.

Auckland Star, Volume LXII, Issue 288, 5 December 1931, Page 4

COMPANY AFFAIRS.

AUSTIN MOTOR CO.

EXPLANATION OF DIVIDEND

"NOT MORE THAN WAS DUE."

Apropos of a cabled announcement, that the Austin Motor company, of Birmingham, had recently declared a dividend of 100 per cent on ordinary shares, the New Zealand representative for the company, Mr. G. H. Scott, forwards the following explanation:—"The dividend of 100 per cent was paid 'by the company, but only on ordinary shares. It places a very different construction on the position when a further explanation shows that the ordinary ehare capital of the company amounts to £150,000 out of a total share capital and stock amounting to £3,412,374. It is also necessary to point out that all the share holdings other than ordinary shares are preferred or debenture stocks, on which a fixed rate is payable prior to there being any accumulation of profit for the ordinary shareholder. During the pa6t eleven years the ordinary shares have carried the brunt of all the difficulties which, faced this and other motor manufacturing concerns in England, in their efforts to reconstruct after the war, and in the case of the Austin Motor Company ordinary shares in the period referred to have been written down from 20/ fully paid to their present book value of 5/. Moreover, during the period of eleven - years the ordinary, shareholders have only received dividends on two occasions, whereas the preference shareholders'and stockholders have been fully paid, and consequently if the general meeting of the company considered it reasonable to £ ive the ordinary shareholder a dividend, which on book value amounted to ]00 per cent, but on original cost of the shaies .meant 25 per cent, it is surely, in view of all the circumstances set out above, not more than was due.

"Another important aspect of_ the matter is that during the period referred to, and especially since the McKenna duties were introduced, the company has annually made important reductions in the retail prices of their products, and has passed on to the public a larger measure of their success than was passed on to the shareholders. The reductions in prices made since the McKenna duties were introduced equal 65 per cent, and in this connection provision has been made in the current year to make still further reductions, which have already been announced."