United Transport's higher earnings
Page 49
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IN his latest interim report the chairman of UNITED TRANSPORT
—Mr. J. H. Watts—makes the comforting comment that since the end of last September group trading has been at a satisfactory level and there are indications that the results for the current year will show an improvement over those for the previous (and record) period. For the nine months to September 30, 1965 pre-tax profits were slightly more than 10% higher than during the same period the year before—£2.37m, compared with £2.1 5m. For 1964 the total amounted to £3.02m.
If this rate of increase is maintained to the end of the year, and there seems a good chance of it, earnings should amount to something of the order of 371-40% after deducting corporation tax. This prospect is almost bound to set in motion an optimism that the total distribution for the year will be increased. Meantime, the interim dividend is being maintained at 6%. But the capital distribution is being doubled to 5% tax free. The final dividend for 1964 was 9%.
With prospective earnings of this order an increase in total seems fairly possible. At around their present price of 18s. these 5s. Ordinary shares yield 4+% based on a 15% dividend. I expect to see growing interest in them as we get nearer to the time of the announcement of the year's results. The chairman of MANN EGERTON—Mr. R. W. B. Hawksleyexpects the company to maintain the "marked" progress it has made in recent years. Stating this in his latest annual review to shareholders he adds that this expectation is founded upon, "reasonable but not necessarily buoyant or very favourable" trading conditions, also an adequate and regular flow of new vehicles from makers.
Nevertheless, because of the credit sgueeze, the forthcoming Budget, general economic uncertainty and, domestically, the increase in overhead expenses and the shrinking of margins, he finds it virtually impossible to forecast the future. During the first three months of the current trading year, he reported. unaudited profits were lower than during the same period a year ago, "but not a serious" drop.
Outside influences are currently dead against companies trading in this particular field. But it will not be the fault of the firstrate Mann Egerton board if the anticipated "marked" progress is not maintained. And at around 13s. 3d. to yield 64-% these 5s. Ordinary shares seem to me worth holding.
Martin Younger