Company Notes
By CUSTOS EASTWOODS LTD. For a specialised invest- ment in the building trades I called attention recently to British Plaster Board. For a more general investment I would add East- woods whose preliminary report has just been published. This company eilanufac- tures'bricks, roofing tiles, fireplaces, drain- pipes and sanitary equipment as well as cement, concrete products and other build- ing materials. For the year ending March, 1953, its production and sales turnover exceeded all previous records. The group trading profit was only 5 per cent, up but with the release of certain balances 'the amount available for distribution was 20 per cent. higher, so that the directors were fully justified in raising the final dividend by 2* per cent. to 12} per cent., making 17} per cent. for the year. At 61s. the shares return a yield of about 5.8 per cent. Moreover, £500,000 of the share premium account is to be capitalised and one new share for two is to be given to the ordinary stockholders. If trade remains good—as it should with over 300,000 houses being built and the Minister of Housing about to speed up slum clearance—shareholders may look for an increase in the total distribution next year.
LONDON COUNTY FREEHOLD AND LEASEHOLD PROPERTIES. If 300,000 new houses are being built each year, it is said that about 200,000 old houses are falling into disuse for want of repair. Plain hints have been given that Mr. Harold Macmillan will intro- duce in the next session a bill to allow for some immediate increase in controlled rents to meet the higher costs of overdue repairs; leaving the more complicated legislation for de-control of rents to a later session. If there is fire behind•this political smoke, one of the leading property companies to benefit Will be London County Freehold and Leasehold which owns flats in Marylebone, Westminster, Holborn, Kensington and Knightsbridge• as well as some commercial premises. For the time being, as a very large part of its property is affected by the Rent Restrictions Act, this Company can only increase its revenues by the re-letting of its uncontrolled properties as existing tenancies expire. It did very well, there- fore, in the year to March, 1953, to increase its earnings from 13 per cent. to 14 per cent. and its dividend from 10 per cent. to 111 per. cent. Until rents can be raised and a reliable net income can be ascertained the Company is not attempting to revalue its properties in its balance sheet. When it does so, its equity capital may be brought into line with its book assets. To give them patience to wait upon Mr. Macmillan's legislation buyers of the 10s. shares at 22s. receive a return of 5.1 per cent.
MERCANTILE CREDIT. This Company is not expecting any favours from the Govern- ment, for, as the chairman of United Dominions Trust recently complained, the Capital Issues Committee will not allow hire purchase finance companies to issue fresh capital on the public market. Although the authorities frown, hire purchase continues to expand and it is expected that when it comes to report its profit and dividend for the year to September 30th, 1953, which it will do in the middle of next month, Mercan- tile Credit will repeat the action of United Dominions Trust and increase its final. In the previous year it paid 15 per cent., out of earnings-of 35 per cent. This year earnings should be higher and the distribution may well be raised to 17i per cent. or even .20 per cent. The shares have been rising in anticipation and at 56s. would return over 6 per cent. if the final is raised to 121 per cent.
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