ASSOC. MOTORISTS PETROL

Dominion, Volume 34, Issue 9, 5 October 1940, Page 14

ASSOC. MOTORISTS PETROL

Capitalization Of Profit

The Associated Motorists Petrol Co., Ltd., shows a surplus of £63,530 in its accounts for the year ended March 31, 1910. This figure included the total amount of the stocks reserve, after provision for income tax, the directors pointing out that alterations in the income lax regulations have required that stocks reserve, built up through the years, shall now be brought into account for the purposes of income tax assessment. The surplus, therefore, was in excess of lhe actual trading prolit, which was not disclosed in the directors’ report to shareholders. The company's protic last year was £51,01-1, and in the previous year £23,493.

Including £7422 brought into the accounts, the amount available for distribution was £70.952. The directors proposed a dividend on preference shares at (ho unchanged rate of 10 per cent., the dividend to be less social security tax. Payment would require £12,345. The directors' report then proceeded: "In view of the uncertain times ahead and the greatly increased capital requirement of the company to finance large stocks at high prices and in this periml of emergency to meet the Government’s request to carry ample reserve stocks, the directors feel that no cash dividend should be paid on the ordinary shares, but that the profit which otherwise would be paid to ordinary shareholders should be captalized and’thus remain in the company to strengthen its position lurther. The directors recommended that the sum of £50.000. representing accumulated profits available for dividend, should be distributed among ordinary shareholders as nt May 30, 1940, in payment in full for 50.000 ordinary shares of £1 each and that such ordinary shares credited as fully paid be allotted to shareholders in proportion to the ordinary shares held by them respectively and that the shares so distributed should be treated for nil purposes as an increase of the nominal capital of the company held by each such shareholders, and not as income. Record Turnover. The directors then recommended that the -balance of profit, £8607, be carried forward. Ordinary shareholders last year received a dividend of 150 per cent, and in the previous year 25 per cent. Ordinary share capital is £25.000, having been increased in 1935-36 from £5OOO. Preference capital is £130,000. The directors said in their report that sales for the year at £1,185,825, represented a new record. A substantial part of this turnover was business obtained in the pre-war period. The directors also mentioned that they had had under consideration the value as it appeared in the books of the company of buildings, fixtures, and plant following past writings-off for depreciation. They had called for an independent valuation of these assets nnd a report on them. This valuation and the report were expected to be available at the annual meeting, and the directors were then going to propose that the balance-sheet be amended in the light of the report, and then adopted. If there was to be any amendment, the directors would submit the necessary alterations in the profit and loss and the profit and loss appropriation accounts to the meeting. The report which the company usually supplies of proceedings at the annual meeting has not yet. been received. I