Company Notes
By CUSTOS LATE last week and on Monday the Stock Exchange experienced its most severe 'shake- out' in the speculative store shares and the developing gold mines of the OFS. Sharp falls were registered and the jobbers were clearly not willing to take stock on their books. From enquiries I have made it would appear that the trouble arose from weak but small speculators who could not finance the carry-over of their' bull' positions to the new account. These bulls' took•their toss, and had, perforce, to sell their shares at the best prices they could find. Investors need not worry. The solid investment' shares were only slightly affected and have since recovered.
I RECOMMENDED VITAMINS a year ago as a suitable ls. share for the small investor. They were then 2s. lid. and yielding 9 per cent. They are now quoted at 3s. 3d. and the directors are making a one-for-two bonus issue. The profits reported for the year ending March last are the largest in the company's history. I was told a year ago that the company had secured a contract for putting • vitamins in our new national loaf. The chairman in his recent statement has now disclosed that their new product 'Vita/nix' is a 'best seller' vilth the milling companies and that the accounts only cover about half a year's sales of this loaf' booster.' The subsidiary company which manufac- tures a new and highly stable form of Vitamin A for animal foods has also had a very profitable year. The parent company has been able to effect great economies through the transfer of its main factory to Crawley and it is building another new factory at Keynsham near Bristol. This will complete the present capital investment programme and the company is proposing to issue preference shares to consolidate its finances. Over the past eight years it has invested over £1 million through share issues and profit reserves. Last year's earnings on the equity capital amounted to over 31 per cent. and 20 per cent. has been paid. The equivalent dividend rate on the increased capital would be 131 per cent. but in view of the chairman's reassuring state- ment about current earnings it is reasonable to expect 15 per cent. Some optimists are going for more but on the basis of 15 per cent. the yield at the present price—equivalent to 2s. 2d. ex rights— would be the very satisfactory one of 61 per cent. WHEN I called attention to the investment merits of GESTETNER twelve months ago the company had just stepped up its dividend from 15 per cent. to 20 per cent. and was giving a one-in-tive free bonus in 'A' shares. It announced this week that it was main- taining the distribution at 20 per cent. on the increased capital. Profits for the year ended August were an all-time record, having risen by over 10 per cent. to £11 millions. The equity earnings increased from 51 per cent. to 56 per cent. In his statement to shareholders Mr. Sigmund Gestetner reports that export sales were al peak levels and that new centres had been opened up at home and abroad to extend sales and services. The company is usuallY, ahead of its competitors in the design and improvement of its office duplicating mach- ines, so that Gestetner's profits may be taken as an index of the current business boom in the western world. The shares were introduced on the Stock Exchange twenty- five years ago and in seven out of the twenty- five there have been scrip issues—amounting in all to over 200 per cent.—apart froth other capital rights. There seems to have been somb market disappointment that the company did not capitalise its Stock Ex- change jubilee and the centenary of the birth of its founder with another capital bonus but perhaps shareholders will not have to wait too long. At the current price of 21s. 9d. the 5s. 'A' shares yield 41 pet cent., which seems adequate in view of the company's strong financial position and record.
MOORE'S STORES may not have fulfilled the market expectations of a 'take-over' bid at 30s. which were current a year ago but I do not repent of having recommended theni for investment at 17s. 6d. These 5s. shares are now quoted at 16s., having enjoyed a 25 per cent. free scrip bonus last April. The trading year to January, 1954, ended with a rise of 121 per cent, in net profits, earnings amounting to 46 per cent. to cover the then dividend of 221 per cent. The equivalent dividend on the enlarged capital. would be 18 per cent. but as an intetim of 71 per cent. has been paid the market is expecting a final of 121 per cent. making 20 per cent. for the year. This would give a potential dividend yield of 61 per cent. This is not an unattrac- tive return for the equity of a prosperous chain of grocery stores, comprising 600 shops in the north of England.
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