TOTALISATOR IN BRITAN

Otago Daily Times, Issue 20536, 11 October 1928, Page 13

TOTALISATOR IN BRITAN

FLOTATION OF A COMPANY. THE “ JULIUS ” MACHINE. ALLOTMENT POSTPONED. (From Our Own Correspondent.l LONDON, August 24. A rather peculiar position lias arisen in regard to the flotation of the company, Totalisators, Ltd., which has as its object the* purchase of the British rights of the “ Julius ” totalizator machine. The prospectus was issued and published last week. Some unfavourable comments appeared in the press, and now the directors have closed the lists and postponed allotment. It was stated in the prospectus that Lloyd’s Bank is authorised to receive applications in respect of the issue at par of ■’■0(1,000 10 per cent, tax free (up to 0s /: the f), participating preferred shares of 10s each in Totalisators, Ltd., which has contracted to purchase from Automatic Totalisators, Ltd., of Sydney, the rights for (Treat Britain and the Irish Free State in the “Premier” or “Julius” totalizator machine. The machine is described as entirely automatic and electrically controlled, and capable ox registering 250.000 bets per minute. It has been installed for some years on the principal racecourses of Australia and New Zealand, and recently on the Longcliamp course at Paris, and the directors arc of opinion that while it is impossible to state which particular type of machine will he adopted by the Control Board , in this country the “ Julius ” has a strong chance of adoption. The profits of the company will be derived from the manufacture, erection, and operation of the machine, but until the Control Board approves the machine the directors are unable to give any estimate of the amount which will accrue to the company. The purchase consideration payable to Automatic Totalisators, Ltd., is £IOO,OOO in cash, plus a royalty at the rate of one-eighth per cent,”of the total amount of money passing through any totalisator manufactured and supplied under the company’s patents, with a minimum of £2OOO per annum. A sum of £30,550 in respect of various services is also payable to Inventions Exploitations Trust, Ltd., which trust also applies and pays in cash for shares in the company of the nominal value of £25,025, and a further sum of £17,250 is to be paid in respect of preliminary expenses. The preferred shares are entitled to half the surplus profits after payment of their non-cumulative 10 per cent. AN UNUSUAL FLOTATION. The Times, though it advertises the prospectus, points out that the dotation is of an unusual kind. ‘‘ That the ‘Julius’ is a most ingenious machine and that it has successfully stood the test of some yeais’ operation on racecourses in Australia, New Zealand, and elsewhere over-sea is a fact not in dispute. “There are, however; a number of other automatic machines in existence designed to fulfil a similar purpose. Howfar any of them at present meets the requirements _of a large racecourse is a question outside our province, but it may be taken for granted that a body such as the Control Board will not enter into a binding contract with any group until it lias made an exhaustive examination of the various totalisator machines that are available. Moreover, as a body charged with a deep sense of responsibility to the public, its decision will | have to be based both on the considerai tions of relative efficiency and relative cost. In this connection we may remind (our readers of the recent remarks of ( Lord Hamilton of Dalzell, who in warning the public against rash investment in totalisator propositions, said that the Control Board would ‘ never agree to the ' adoption of any machine, whatever its i excellence, if the terms on which it has I to bo acquired will impose an unfair ( charge on the public which uses the machine.’ It is obvious that with the deI cision of the Control. Board, a matter I impossible to forecast, the shares of the I new company ought not to be bo fight at : present by anybody who is unprepared to incur a large degree of risk. QUESTION OF EQUITY. “ We have dealt first with what is the vital consideration that must weigh with the public over the appeal made to it to take up shares in Totalisators, Ltd., but there are one or two other points about the flotation that invite comment. Of the authorised capital—namely, £253,000 —as much as £245,000 is in participating preferred' shares, whose income rights are restricted to a tax-free dividend of' 10 per cent., plus £0 per cent, of the surplus profits. The ether 50 per cent of surplus profits is all to : belong to £.5000 of deferred capital, none of which is being offered to the general public. To ask the public to take the i great bulk of the risk while severely rci stricting its rights to the equity is not a I practice that car. be commended. Furj ther, the payments of a preliminary I nature associated with the promotion i seem relatively rather onerous. In addii tion to £17.250 payable to the French, I British, and Foreign Trust, Ltd., for I what may be called the customary preI liminary expenditure, the company is under obligation to pay £30,550 to another concern, the Inventions Exploita- | tion Trust, Ltd., for other services renj dered. This intermediary is taking up shares of the nominal value of £25.625, i which includes 72.500 of the total .of’ 100.000 deferred Is shares that, as we have stated, are entitled to 50 per cent, of the equity.” DIRECTORS’ PROTEST. In a published statement the directors have now intimated that they have closed the lists and have decided to postpone the allotment. They further state that “no intimation of any objection was made until practically the whole of the public advertising was completed. Had any intimation been given to the directors earlier, they would have had an opportunity of considering the position before incurring the necessary expenses of an issue. “ The directors can say with confidence that if the purchase of the machine had been made conditional on the license of the Control Board first being obtained, the terms upon which it could have been purchased would have been far less favourable to the company than the contract it has entered into. ■'Whatever decision inav be. come, 1a by the directors with regard to allotment, it is their intention to complete, the Purchase of the patent rights of the ‘ Premier ’ or ‘Julius’ machine, ns they are confident that this machine :s the one which will ultimately be adopted to bo in general use.”