COMPANY NOTES
SIR NUTCOMBE Hume, chairman of the Charterhouse Group, discloses in his report for the year ended November 11, 1958, that plans for a public issue of ordinary shares are practically complete. Since its formation twenty-three years ago with a capital of £200,000 as a subsidiary of Charterhouse Investment Trust, the capital is now £5.59 million, of which £3,089,000 is in £1 ordinary shares. The Group, now a holding com- pany, comprises interests in industrial and engin- eering companies (such as Edmundsons Electric, Alenco Ltd., Siroma Engineering) which amount to 17.6 per cent. of the total. Other interests cover insurance (through Glanvill Enthoven) and bank- ing services through S. Japhet, which in turn has a substantial interest in one of the smaller hire- purchase companies. Such an organisation, built up by a far-sighted chairman and backed by excellent management, will undoubtedly appeal to the investor looking for a growth stock in the investment sphere, for apart from the above- mentioned interests, the Group operates as mer- chant bankers' and a finance and issuing house. A dividend of 74 per cent. is proposed on the £1 ordinary shares for the past year, so that if these shares are made available to the public at around 30s. to 32s. 6d. they will be well worth acquiring as a sound investment with growth prospects.
In these notes on January 30 we commented on the expansion of Lombard Banking; figures for 1958 reflect this growth in a marked manner. Awley Finance (acquired last September), Lorn- bank Scotland and Devon House Finance, to- gether with various overseas interests, have all gone to swell the group trading profit which was £1,412,862, mote than double that for 1957 of £644,252. Net profits (after tax) for 1958 were £440,451 against £274,817. The chairman, Mr. E. G. Spater, explains that this is only part of the story as several of the new overseas subsidiaries have as yet to complete a full year's trading so that a larger contribution to profits can be expected from them during 1959. These companies are Lombard Australia (formerly Consolidated Finance); the New Zealand Company which took over three companies in 1958; another in Uganda and one in Singapore. In January Equity Credit was acquired in this country. It is planned to open . thirteen new branches this year (eight last year). Last July a 3-for-4 rights issue was made at 12s. 6d. when the 5s. ordinary shares were offered to the public. These are now 27s. 3d. to yield only 2.8 per cent. on the 16 per cent. dividend. Those who acquired these shares at lower levels should con- tinue to hold, as it is believed that another 'rights' issue is oh the way. The outstanding success of the group is mainly due to the leadership of the managing director, Mr. Eric J. P. C. Knight.
The results of British Ropes for 1958 may at first appear to be disappointing because of a de- crease in the trading profit from £2,862,855 to £2,258,293, but there is a considerable increase in the investment income' from £200,653 to £344,473. After allocating a larger amount for depreciation but having to provide less for taxa-
tion, the net profit (after tax) comes out at £1,061,318 against £1,334,700 and provides a 45 per cent. cover for the 18 per cent. dividend as compared with 17 per cent. paid last year. For the past five years (to 1957) the trading record of this company has been excellent and it is reasonable to expect a recovery in iwofits this year, especially as British Ropes have just acquired 94.4 per cent. of the issued capital of R. Hood Haggis. This will be paid for in cash, but to provide the necessary resources, the directors intend to make a rights issue of one share for every four held. The terms of this issue will be announced at the annual general meeting on May 6, when no doubt the chairman, Mr. Herbert Smith, will give share- holders more information concerning the Hood Haggis asset and the current year's trading. The 2s. 6d. ordinary shares at 9s. 3d. yield 4.8 per cent.
A record trading profit in the company's history is reported by Senior Economisers, fuel economy specialists whose products are manufactured by International Combustion. This is the company's twenty-fifth anniversary, which is being marked by a special interim of 124 per cent. As well as the usual dividend of 50 per cent. a 200 per cent. scrip issue is proposed and with it a cautionary statement that shareholders should not expect a dividend increase for some time to come, i.e., more than 164 per cent. on the increased capital. The chairman, Mr. D. C. L. Green, forecasts that 1959 profits for the group may drop on account of lower profit margins on present and future long- term contracts. Group trading profits for 1958 amounted to £349,433 against £262,909 for 1957, and net profits (after tax) were £163,892 against £115,365. In 1957 the retained surplus was £75,115 : for 1958 it amounted to the substantial figure of £123,642. In view of the directors' state- ment there may not be very much scope for further appreciation in the ls. ordinary shares, now 9s. 3d. to yield 5.4 per cent., but the dividend is covered four times and the company's excellent record should enable the shares to hold their own on the present basis.
It is fortunate that the Melbray Group has diversified its interests, for the results to Sep- tember 30, 1958, disclose that the catering and food manufacture section of the business has not contributed to the excellent profit figure. The chairman, Mr. R. A. G. Edwards, will be able to report happily to shareholders on the company's other activities which include British Rototherm, manufacturing temperature gauges, Commercial X-Rays, manufacturing equipment for the safe handling of radio-active isotopes, and also two other subsidiaries, Gamma Rays and Gamma Components. Group trading profit has increased from £167,650 to £204,697 and after a heavier tax charge, the net profit has improved from £56,743 to £80,781. The company expects that there will be 'some improvement from the catering side of the business this year following on the manufac- ture of quick-frozen foods, a new and profitable line. The 2s. shares at 14s. yield 5.3 per cent. on the dividend of 374 per cent. (35 per cent. in 1957).
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