12
@
(c) Subscribers.
If net profits exceeded 12,
half the excess up to 18, and the whole of
any excess over 18,, was to be used for
reducing subscription rates; but rates not
to be reduced below what was necessary to
provide minimum dividend of 8 por amum to
Shareholders.
4. By 1940 the Company had got into the position of
making profits considerably in excess of amount
needed to pay dividend of 12%, but wanted to devote
excess profits to payment of higher dividends rather
than to reduction of subscription rates since those
rates were considered low enough. In ensuing
discussions between Company and government it was
agreed that:-
(a) Goverment royalty was inadequato;
(b)
Maximum dividend of 15 gave Company no
incentive to earn profits by greater efficiency
and economy after that maximum was reached; and
(c) Subscription rates(117 per annum flat charge
covering unlimited number of frce local calls)
were already low and did not need reducing.
It was thereforu decided to revise the existing
arrangements by giving the government a greater scare,
by removing the maximum limit for dividends, and by
repealing the provisions for devoting certain excess
profits to reduction of subscription rates.
1940 Financial arrangements.
5. As a result of Ordinance No. 9 of 1940 :-
(a) Government retained royalty of per line and
in addition obtained froe telephone service up
to 500 lines plus 25 reduction in charges for
lines in excess of 500. Also obtained an
additional royalty of half any net profits
exoeeding 12 per annum.
/(b)