CABLES AND WIRELESS.

New Zealand Herald, Volume LXVII, Issue 20607, 4 July 1930, Page 13

CABLES AND WIRELESS.

HEAVY SLUMP IN STOCKS. preference dividend only. DECLINE IN TRAFFIC EARNINGS. Bj Telegraph—Press Association—Copyright. (Received July ;i. 5.5 p.m.) LONDON. July 2. Cabins nnd Wireless, Limited, will not. pay a dividend on Iho A and B ordinary stocks. It will p n y OM | V j n torpsL on the Sj poV con!, cumulative preference stock. After the announcement that the company would not, pay dividends the shares A stock fell from 36i, to oOi, B from 16 to 12A and the preference stock from 87 to making a total drop on tlio market capitalisation of about £10,000,000 and of more than £29,000,000 compared with tho highest prices last year. Ihe report of Imperial and International Communications, Limited, states that the leductions in the rates for all classes of tiaffic already made are estimated to involve an annual loss of £BO,OOO. The report adds: "The provisions made in the report of the Imperial Wireless Conference included fixing the standard net, revenue at £1,850,000. Any excess beyond this was to bo allocated as to 50 per cent, to reductions in rates.

'J ho present position is a complete reversal of that contemplated by tho conference, as the reductions in rates have been, and are being, put into force in advance of the receipt by the company of those surplus profits. Therefore, .1 he company has asked the advisory committee to allow the company to recover later the loss in revenue from these reductions from tho aforementioned 50 per cent, excess, when such excess is available."

Cables and Wireless, Limited, and Imperial and International Communications, Limited, are the complementary organisations established last year to givo effect to the merger scheme embracing the Eastern and associated telegraph companies and the Marconi Company and including tlie acquisition of tho Pacific and West Indian cables and the leasing of tho British beam wireless stations. One of the foundations of the merger financo was the assumption that the Communications Company, which look over all tho telegraphic services, would earn tho standard net revenue, £1.865.000, to which tho holding company, Cables anil Wireless, would add (ho income front investments and manufacturing profits to provide the balance of the fund required for dividends. The passing of dividends, except on tho preference stock, is due to disappointment of that anticipation; according to a cablegram published yesterday, it was disclosed at tho annual meeting of Imperial and International Communications that the profits for 21 months were £2,013,155, and a dividend of 5J per cent, for that period was declared. Theso amounts are equivalent to £1,156.000 for a year and £3 5s 8d per cent. The capital of the Communications Company is £30.000.000; a dividend of over 6 per cent, would be required to pass the whole of the standard net revenue to Cables and Wireless. Tho capital of Cables and Wireless is £53,700,000, comprising £23.500,000 of 5£ per cent, cumulative preference stock (requiring £1,292.500 per annum); £21.200,000 of 7i per cent, non-cumulative A ordinary shares (requiring £1,590.000) and £9,000,000 of B ordinary shares, the last being entitled to all surplus profits after payment of the fixed charges on the first "two categories. Calculating the prospects of the company last Jauuaiy the London Financial News concluded that toward the nominal fixed charge of £2.882,500, it would _ receive. £1.865,000 from the Communications Company and £487.000 from investments, leaving about £530.900 to be earned by the MaVconi manufacturing assets. As to the last., it remarked: " It appears necessary that the Marconi manufacturing profits should expand very greatly from their 1927 amount (the latest disclosed) if the merger fixed dividends are to be paid. On the .'.a test quotations, the market valuation of the ( ables and "Wireless stocks is £25.433,500. It was officially stated last Man It that there are 35,000 shareholder.) in the company.