MONEY MATTERS
Page 78
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ERF Expansion
policy of the ERF GROUP is one of expansion Ton all sides with a keen eye to a sensible degree of diversification allied to the motor industry. This fact is made abundantly clear by the chairman—Mr. E. P. Foden—in his latest annual review sent to shareholders.
There is no doubt, he continents, that expansion in the motor industry "is assured ". Mr. Foden states that the continual rise in costs makes it hard indeed to maintain adequate profit margins; particularly is this the case in respect of export business. Nevertheless, he expects the current trading year to be generally good. He looks to turnover rising appreciably. The board has taken steps to ensure a more adequate flow of supplies. This, in my opinion, is a share to be held.
The dividend record of LEP GROUP during the past five years is indeed commendable. The distribution has been raised in each successive year from 141% paid in 1959 to 21% paid in respect of 1963. The results for the year ended December 31 last can be expected in a few weeks' time. Already the market is beginning to get ideas about the size of a further possible increase.
During 1963 trading profit jumned to E1.189,346 from £958,013 the previous year and there was a 24% increase in the dividend. Profits in the UK accounted for 50% of the total and the chairman—Mr. Richard Leper stated they were the "best yet ". During that year there was considerable capital expenditure made on road transport vehicles and depot equipment "with a view to more efficient operation ". This, added to the further expenditure by way of new offices, depots and warehouses, should bring initial benefits any time now; indeed, there may well be clear signs of these in the results shortly to be announced.
The trading interests of this group are widely spread. covering Europe, Canada (and other Commonwealth countries) and they have an office in Chicago. At around their present price of 148s. these £1 shares yield a mere 24% based on the latest dividend of 21%. But this dividend was covered almost four times by earnings and in view of the healthy expansionist attitude of this group it is one, in my view, that is well justified.