INCREASE IN PROFIT

Evening Post, Volume CXXVIII, Issue 5, 6 July 1939, Page 12

INCREASE IN PROFIT

KIRKCALDIE & STAINS, LTD. CAPITAL PROPOSAL Directors of Kirkcaldie and Stains, Ltd., Wellington, report for the year ended February 25, 1939, that net profit from trading, before providing for depreciation of premises, plant, and fittings, is £8576 0s Id, compared with £5671 9s 3d last year, an increase of £2904 10s lOd. After making due allowance for depreciation on the items mentioned, the actual net profit for the year is £6136 lls Id, compared with an actual net profit last year of £3207 8s Id. After providing the sum of £2633 for taxation, the debit balance in the profit and loss appropriation account is £21,946 6s 6d. The balance-sheet of the company as at February 25, 1539, compared with that of February, 1938. is as follows:— LIABILITIES. 193 ft. 1938. £ £ Preference shares of SI each 131,250 331,250 Ordinary shares of £1 each 33,900 33,900 Mortgage '..' -'0,000 20,000 Bank (secured), creditors,, deposits, and exchange reserve 79,88-1 SO, 933 Tax reserve . 2,633 805 Total S 267.607 £266,0 IS ASSETS. I.'i3!>. 1935. £ £ Cash and stamps GS T5 Sundry debtors 20.500 37,251 Payments in advance 820 1,283 Stock '. 62/JO3 61,083 Centennial Exhibition shares 200 100 Plant and . fittings ' 30.208 9,695 Land and buildings . 150,722 152,010 Profit and Loss Approp. Account 21,946 25,430 Total £2G7,GC7 £26(5,948 The. profit and loss account for the twelve months ended February 25, 1939, shows gross profit at £61,440. Expenses total £52,864, and after alj lowing £2439 as depreciation on buildings, plant, and fittings there is a net profit' of £6137. CAPITAL REDUCTION. The directors will place before shareholders a proposal to write down the ordinary capital by 19s a share at an extraordinary general meeting to follow the annual general meeting of the company, to be held on July 20. The directors state that they consider it is in. the interests of shareholders that the company's balancesheet should now be reconstructed so as to eliminate capital losses incurred in the early years of the depression. (Until this is done, notwithstanding that the. profits of any year might justify a dividend, such profits should properly be applied in i-ecouping lost capital. The directors, therefore, propose that I the! capital be reduced by writing down 1 the ordinary capital by 19s a share, and then consolidating • the ordinary shares so that every then ordinary shareholder will receive one new ordinary share of 20s for every twenty shares of Is each held by him. r This will provide a sum for reconstructing the balance-sheet of £32,205, which the directors propose to. apply as to the sum of £21,946 6s 6d in writing out that sum now standing to the debit of the profit and loss account and as to the sum of £ 10.258 13s 6d in creating a reserve fund in pursuance of article 102 (1) of the company's regulations. DIVIDENDS. In consideration of the ordinary shareholders agreeing to the cancellation of ordinary share capital, the directors propose that the preference shareholders agree to the waiver of accumulated arrears of preference dividend and to the modification of their preferential rights, so that in lieu of a right to a / per cent, cumulative preferential dividend, the preference shareholders accept a right to receive in any years profits are disi tributed, and before the ordinary , shareholders participate in such profits, !a dividend not exceeding 6 per cent. If, after paying a dividend of 6 per cent, to the preference shareholders, the distribution then made should be [sufficient to provide further dividends, ! the directors propose that the ordinary I shareholders are to be entitled to re- | ceive a dividend up to but not exceeding 6 per cent., and that any further surplus of profits distributed in such iyear shall be divided between"the preference and the ordinary shareholders iin the proportions of three-fourths to the preference shareholders and onefourth to the ordinary shareholders, in ieach case in proportion to the capital | paid up on the shares. The directors further propose that if the foregoing proposal is agreed to by the pz*eference shareholders, should there be on a winding-up a surplus of assets after satisfying the claims of creditors and the claims of preference and ordinary shareholders to any dividends declared but unpaid, and the-capital paid up on their shares, such surplus shall be divided between the' holders of preference shares and Ordinary shares in the proportions of three-foux vths to preference shareholders and one-fourth to ordinary shareholders, and in each case in proportion to the capital paid up on their shares.