proposals a . fortnight agd,. I Wrote : " If an
avetage annual profit of, say, -£4o,000 is within reach, then both desks of Preference holders are being asked to give too much away to the Ordinaries ; if the reasonable expectation of profit is about £30,000, the scheme is still slightly favourable to the Ordinary holders, but perhaps justifiable on the broad working principle of give and take." ' Well, . the board has now done what it ought- to haye done when -the scheme was first put forward and told us what the earnings are. For the year ended July 31st, 1937, they rose from £6,669 to roughly £15,000, for the current financial year they shotild be about £25,000, and, in present trading conditions, they are not likely to exceed £3o,00o to £35,000.
My own guess of £30,000 as a practicable basis for assessing
the scheme is thus not far from the mark, but is apparently a little -optimistic just for the present. In relation to earnings of £25,000 I think the scheme is reasonably fair -and that Preference holders might give it their support. First preference holders might expect to receive -the 6 per cent. dividend on their ten shillings' worth of new .6 per cent. cumulative prefer- ences and 6i per cent. on 'theft- ten shillings' worth of non- cumulative participating preferences,- while there would be roughly 34- per cent—for the new -Ordinary shares. -On this basis a fair valuation for the existing First Preferences would be 18s., against today's price of 14s. in the market. A reasonable price fcr t le new £i ordinaries would be 12s., from which there would be scope for a gradual improvement as the company's recovery gathers strength.
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