Beviaw of Bericu-s, 1/9/13. 



FINANCE AND BUSINESS. 



743 



SARGENTS LIMITED. 



The net profit of £go2/ earned by 

 this catering- company for the June, 

 191 3, half-year is about ;^28o less than 

 that of December, 191 2. From this one 

 would be led to surmise that the period 

 had not been so profitable. By reason 

 of the fact, however, that the Decem- 

 ber profit included ;^i 180 which was de- 

 rived from the sale of property, it will 

 be seen that the trading profit for June 

 was in reality better by ^^900. This im- 

 provement is due to a rise in the gross 

 earnings of over ;£'4370, or ;^59,700, 

 whilst the expenses were only increased 

 by ;^347o. The percentage of net profit 

 to gross earnings was 15.1 per cent., as 

 compared with 14.7 per cent, in Decem- 

 ber. 



* * * 



Of the profits earned, the usual 10 per 

 cent, dividend absorbed ;^4850, an in- 

 crease of £^150, due to a dividend being 

 paid for the three months on the new 

 capital of ;^6ooo. In addition, ;^4000 

 was added to the reserves, which now 

 stand at ;^ 19,000 for general reserve, and 

 ^8000 dividend equalisation reserve. 

 The Directors will doubless be encour- 

 aged in their expansion policy by this 

 improvement in the earnnigs. During 

 the past half-year the purchase was 

 completed of the Market-street property, 

 upon which they obtained ;^i 3,250 

 under mortgage at 4^ per cent. In addi- 

 tion they purchased the property adjoin- 

 ing the factory at Darlinghurst, upon 

 which already extensions have been 

 commenced, which, it is expected, will 

 be complete during the current period. 

 New tea-rooms were also opened in three 

 centres in the city, whilst business has 



just been begun in a fourth. 



* * * 



For these extensions money is re- 

 quired, so that the expenditure of over 

 ;^i6,500 upon freehold land and build- 

 ings, which now appear at ;£'40,850, is not 

 astonishing. The plant, machinery, fur- 

 niture ancl fittings asset, ^^"38,195, is 

 practically unaltered, there having been 

 but little outlay thereon. Cash, which 

 now totals i^i 1,300, is ;^48oo more than 

 in December, but this, no doubt, will be 

 required before the factory is complete. 



In regard to the assets, there is an ap- 

 parent conservative valuation placed 

 thereon, though the method of grouping 

 leaves much to be taken for granted, and 

 more to be desired. The present value 

 of the leasehold premises and improve- 

 ments, after (it is stated) ample pro- 

 vision has been made for depreciation, 

 etc., is ^^20,550. The assets: plant, 

 machinery, fittings, etc., ;^38,ooo, is large, 

 and IS above 30 per cent, of the total 

 realisable assets of ;^i 23,300. The real 

 value of this asset depends mainly upon 

 the continuance of the business as a 



going concern. 



The indebtedness of the Company to 

 external creditors is ;^22,45o, being 

 ;£"i8oo less than in December. There is, 

 however, the new mortgage liability of 

 ;^i 3,250. After deducting these liabili- 

 ties, together with the current dividend 

 and the goodwill of ;^45,ooo, there re- 

 mains a surplus of assets amounting to 

 over ^82,800. This surplus is applic- 

 able to the paid-up capital of ;^i 00,000 

 in £\ shares, and reserves of ^^27,831, 

 less, of course, the goodwill, which 

 leaves i6s. 7d. per £1 share, being a 

 slight improvement upon the surplus 

 six months ago. The last sale of the 

 shares was made at 25s., so that in this 

 price there is 8s. 5d. yiex share for good- 

 will, which is slightl)' below that of 

 9s. 9d., in February last. The investor 

 it seems, is rather shy at the present time, 

 chiefly, no doubt, because of his fear of 

 possible effects which awards of the 

 wages boards are going to have upon 

 the earning capacity of the company. 

 This company's shares some four years 

 ago sold readily at 30s. to 32s., at which 

 time there were but small reserves, and 

 the profit was below that now obtained, 

 whilst now at 25s. the market is quiet. 

 Not only is the dear money market re- 

 sponsible for this, but other possible 

 causes are the uncertainty for the future 

 of catering concerns, as well as an un- 

 willingness on the part of investors just 

 now to purchase trading companies' 

 shares. 



