MONEY MATTERS by Martin Younger
Page 70
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Bain and Hodge—example of 'profitless prosperity'
ALONDON broker's now famous comment "profitless prosperity" (referring to the general pattern of current trading) springs to mind when glancing at the latest figures put out by Bain and Hodge. Turnover during the six months that terminated on November 30 improved to £2,229,000 from £1,847,000 in respect of the same period the previous year. Nevertheless, pre-tax profits declined to £77,000 from £98,000. These figures are arrived at after allowing for a depreciation charge of £149,000 (against £126,000), but before knocking tax off amounting to £18,000 (£23,000).
In an accompanying statement the directors comment that it became apparent that profits for the comparable period of 1965, as published in February 1966, i.e. £143,000, had been over-stated. On the advice of the group's new auditors the figures had been adjusted. Meantime, an interim dividend of 24 per cent had been declared.
The statement points out that the directors have in mind the postponing of a decision on distribution policy until the results for the full year are available. They also have well in mind the question of a review of rates of depreciation at present being used; early results of their investigations suggest these rates are too low.
A year ago the interim dividend (then 10 per cent), was followed by a final payment of 124 per cent. Though the effects of adverse conditions upon the results of the second half of the year's trading cannot be estimated, the board warns, the directors do, nevertheless, foresee an improvement in the figures provided there is a measure of success to the efforts now being put into trying to solve management problems. Not unnaturally these shares were an easier market immediately following the latest statement. At around their present price of 7s. these 5s. Ordinary shares are only ls. above their 1966/67 "low" point.
Leeds-based Barr and Wallace Arnold Trust is paying an interim dividend of 5 per cent. Last year a half-way-stage payment of 10 per cent (for tax reasons) was made, the final being 5 per cent.