Leyland Capital Reconstruction.
Page 60
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THE scheme for reconstructing the capital of Leyland Motors, Ltd., which was promised by the directors at the annual meeting a mouth ago, has now been issued and has already been approved by a private meeting representative of all classes of shareholder.
At the end of September, 1927, the accounts showed a gross profit for the year of L395,784 and, a net profit of 1233,842. The 'adverse balance which, at one time, was about 11,000,000, had been reduced to 1284,625. The directors now propose to deal with this adverse balance by writing dawn the value of the ordinary shares from 20s. to 10s., this having the effect of creating a valuable capital reserve of 1165,375.
In order, however, to provide means for obtaining sufficient capital without the need for paying fresh capital duty, it is proposed to increase the capital again to its old figure_ by the creation of 900,000 new ordinary shares of 10s. each. The present issued capital eonsiets of 200,000 6 per cent, cumulative preference shares, 750,000 Ti per cent. cumulative preference shares and 900,000 ordinary shares, all fully paid.
The dividends on the ' preference shares are in arrears from January 1st, 1921, and in order to deal with these arrears, which amount to one-third of the face value of the shares, it is pro
posed to raise the future rates on the shares to 8 per cent. and 10 per cent. respectively, which is certainly rather better than issuing additional shares in respect of the arreare. On the new basis the annual requirements for preference dividends will be 191,000.
The scheme is a very sound one, because at the end of the next. financial year the surplus profit will be available for the reduetion of the bank overdraft, the creation of reserve and the payment of a dividend on the ordinary shares. All these shares will rank for dividend as from 'April 1st, 1928. It is not proposed to issue new ordinary shares at present.