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MONEY MATTERS—
Page 112
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Higher Payment by Transport Group
THERE was good news for the shareholders of 1 TRANSPORT GROUP (HOLDINGS). Group profit for 1964 soared to £82,000 from £29,862 the previous year. After a considerably larger tax charge— £26,000 against £3,337—the net balance comes out at £56,000 compared with £33,199. Out of these higher earnings the directors proposed raising the dividend to 18% from 15% paid the previous year. There is also the proposal to make a scrip issue on the basis of onefor-two.
These improved figures, it is pointed out, stemmed largely from improved results of the group's activities other than its cab operations. At around their present price of 4s. 3d. these 2s. Ordinary shares yield a shade more than 7% "cum" the scrip issue and look reasonably valued.
Buying of HANGER MOTOR CO. (BIRMINGHAM) Ordinary shares ahead of the interim statement proved to be well justified. For the six months ended December 31 last, group trading surplus improved to £198,000 compared with £146,000 during the same period a year ago. Group pre-tax profit was £46,000 higher at £150,000. Direct benefit of these better earnings is being passed to shareholders and the board has declared an interim dividend of 9% which is 3% more than was paid previously.
In the absence of unforeseen circumstances the directors forecast that the full year's profit will exceed that of a year ago; in that event they intend to recommend a final dividend of 14%. And this final payment would be paid on a capital now proposed to be increased by a scrip issue—the directors recommend the capitalization of £250,000 of reserves to bring the issued capital more into line with the capital employed—on the basis of one-for-two.
As pointed out in the announcement, if 14% final distribution is made on the increased capital, the "dividends for the year ending June 30, 1965, would be equivalent to 30%, less income tax, on the present ordinary share capital" compared with 20% for the year ended June 30, 1964. There was strong buying of the stares after the news, which lifted the price to around 7s. 6d. At this price they yield the above-average 8/64 based on the envisaged 20% payment. They should go higher.
Because of a severe shortage of chassis and the disruption caused by removing to a new factory the coachbuilding section of WADHAM (HOLDINGS) had a less satisfactory year in 1964 than in 1963. Nevertheless, this group (the shares came to the market last November) reports satisfactory results. Consolidated profits improved to £458,228 from £366,996. The board recommends a final dividend of 10% (forecast 8%) payable on a capital made larger by a 1-for-4 scrip issue. This makes the 1964 total equivalent to 14%. Yielding 61% at their present price of around 10s. 6d., these 5s. Ordinary shares seem to me to be fairly valued.
Martin Younger