NEW ISSUES OF CAPITAL

Press, Volume LXXXIV, Issue 25581, 24 August 1948, Page 6

NEW ISSUES OF CAPITAL

PAYMENT OF PREMIUM CRITICISED "It is regrettable,” says the chairman ot Apex Investment Company of New Zealand. Ltd., Mr H. A. R. Dunderdale, in his annual review of the company’s operations. "that companies are compelled to make new issues of capital to their share-, holders at substantial premiums. This system not only tends to keep the market price of the shares high, but also leads to confused thinking on the subject of dividend rates, which, of course, are declared on the nominal value of the shares. It is obvious that if a company issues a £1 share at £2, the real rate of return is only half the apparent rate. Unfortunately, there is a considerable section of the community w’hich ignores this fact altogether and considers that the investor receives too high a return on his invested capital. Whilst there was some merit in the regulation when excess profits tax was in operation, it is difficult to see any justification for a continuance of the system under peace-time conditions. Nor does it make any difference to the aspect of inflation. If a company wishes to obtain an acditional £lOO,OOO. it makes no difference to the cash withdrawn from the public whether it issues 100.000 shares of £1 each at par, or 50,000 shares of £1 at an issue price of £2 each. If at some later date this premium is dis- ' tributed as a bonus issue, or returned on liquidation, it is classified and taxed as a ‘dividend,’ which is unfair to the holder concerned." - Milne and Choyce, Ltd.—Milne and Choyce, Ltd., is recommending a final dividend' of 5j per cent., making 10 per cent, for the year ended July 31. (P.S.S.). Grey and Menzies, Ltd.—Grey and Menzies, Ltd., earned £4129 in the year ended June 30. an increase of £546 on last year. The dividend is again 8 per cent, on preference and ordinary capital. The sum of £4659 is carried forward.—(P.S.S.) Weeks, Ltd.—This company’s net profit for the year ended July 25 was £9725, compared with £8274 for the previous year. The transposition of a line in the balance-sheet gave an incorrect figure in the summary of accounts published yesterday. K.D.V. Boxes.—The net profit of K.D.V. Boxes, Ltd., for the year ended June 30 was £3092 against £4141 last year. The re* suit is reached after provision of £3961 for taxation against £5580, and allowing £4775 for depreciation compared with £5784. Sundry capital gains in the year added £562 td-the balance in the appropriation account. The dividend, again 6 per cent, for the year, absorbs £3400, leaving £3458 to be carried forward against £3204 brought in. The directors say labour difficulties are as acute as ever.—(P.S.S.) Apex Investment Accounts.—An increase in net profit from £1674 to £2014 is shown in the accounts of Apex Investment Company <ff N.Z., Ltd., for the year ended June 30. The carry-over from the previous year was £484, making a total of £2498 available for appropriation. After provision for interim and final dividends (previously announced), a balance of £586 is carried forward. Expenses of management and directors’ fees absorbed £435. The aggregate value of in vestments is shown at £72.205. against £66,505 for the previous year. During the year the investment fluctuation reserve was increased by £4 to £3506. The general reserve remains unaltered at £250.