The arbitration in connection with the losses sustained by the Nanking-Shanghai Railway in 1932, owing to the Sino-Japanese troubles of that year, was, it is understood, concluded The award, it i believed, has gone definitely in favour of holders of the net profit certificates and has affirmed the principle that each financial year for the purpose of dividends is self-contained.
On this subject it is pertinent to recall the comments of "Watcher" i "Finance and Commerce" on May 26—about a month before the award s due to the certificates for 1933 and for the first half of 1934, amounting to roughly 14/- per Certificate, are now in the bank, and may be distributed immediately the arbitration award is made public. As is known, the point at issue in this connection concerns the loss incurred by the railway in 1932. That loss amounted to over $2,000. 000, and the argument on one side is that, as profit certificates receive one-fifth of the profits of the line, they should be debited with a similar proportion of the loss, when a los on working is shown. In other words it is claimed that $400,000 should be deducted from profits, which have since been accumulating for the certificates, before any distribution is made. The case for the certificate holders, of course, is that they are concerned solely with the finance results year Bg year; when there no.profits. the ive nothin; the matter is concluded; but when profits are made, they should receive their share, without any reference to what has happened in the past If the arbitrators have decided are about to decide, this point on the basis that bygones should be bygones, it is perhaps natural that the market quotations for the certificates should harden, as it will mean that holders will receive approximately 14/- at once, and their share of the profits for the second half of 1934 ad d 1926 in a comparatively short time, It we put the latter sum at 25 there is, roughly £2. waiting to be picked up. That makes a difference, but as I was not present at the arbitration meetings, and do not even know the names of the arbitrators, although I have made discreet inquiries, I cannot say which way the cat is going to jump. All I can surmise, judging from the transactions which have {aken place, is that there are some fortunate individuals, who are either better informed, or are taking a sporting chance that the railway authorities will come forward and offer £10 to £12 for the certificates in order to get them out of the way, Profit-sharing certificates, which are entitled io a, fixed share of the net profits whatev the capital of the railway may be, represent an obstacle to the aising of new loan ud if the railw authorities are considering the possibility of obtaining more capital they would naturally desire to retire the certificates, if acceptable terms could be arranged,
Text read from the printed page and cleaned; old type leaves the occasional error.