I026 



REVIEW OE REVIEWS. 



December l, 191S. 



TOOTH & CO. LTD. 



The conservative policy of this com- 

 pany's directors in the past suggests that 

 there is no need to be alarmed about 

 the fall of ;^4700 in the September, 

 1 91 3, half-year's proht of ;^90.6i3 com- 

 pared with the previous winter's eam- 

 ingfs. The board do not tell all thev 

 know, and it is probable that the half- 

 year earned a much larger sum than that 

 disclosed. This view one finds sup- 

 ported b}- two actions of the directors. 

 One is the increase in the preference 

 dividend from 6 per cent, to 8 per cent., 

 involving as it does an increased divi- 

 dend charge of ;£^5500 half-yearly. The 

 other is the appropriation of ;£^I0.CX30 

 as a nucleus of an employees' benefit 

 fund. Both these actions suggest a de- 

 finite knowledge that the company can 

 earn the increased preference dividend, 

 and can also provide for further pay- 

 ments to a benefit fund. 



For that benefit fund will not be a 

 small thing. It is founded on generous 

 lines. It is to be for the benefit of all 

 employees in the event of death or dis- 

 ablement while employed by the com- 

 pany. But they have nothing to pay. 

 The directors ask from them nothing 

 but faithful ser\-ice. for the cost is to 

 be fully met by the company. Of 

 course, the board will have full control, 

 but the employees will have a free 

 guarantee of a pension or a death 

 benefit. 



Now, as the company's employees are 

 many, this fund is not to be cheaply 

 established. The present payment of 

 ;£^io.oco will have to be added from 

 time to time by other pa}-ments until 

 sufficient funds have been accumulated 

 to meet the liabilities. The directors, of 

 course, must know this, and must have 

 counted the cost. That cost apparently 

 they consider the company will be well 

 able to provide out of its future profits. 

 Hence it is clear that they do not fear 

 any marked decline in the earnings from 

 which one may safely assume that the 

 present falling off is more apparent than 

 real. 



The profit admitted did not suffice ; 

 about £11.400 to meet the current ap- 

 propriations, and the profit and loss 

 balance was accordingly drawn on for 

 that sum. The total amount appro- 

 priated was ;£" 1 02,000. of which the half- 

 \'early dividends of 8 per cent, per an- 

 num on preference shares and of 10 per 

 cent, on ordinary shares took up £"77,000. 

 The reserve for depreciation of securi- 

 ties was increased by ;{^5000, and the 

 dividend equalisation reserve by ;£^io,000 

 which sum was also set aside for the 

 benefit fund. The company's assets, 

 now nearly ^71,985.000, have only in- 

 creased by ;^40OO during the half-}-ear. 

 But the composition has changed rather 

 more than this for the main asset, bre- 

 wery, etc.. has grown by ;{r28,ooo to 

 nearly ;/7i, 230,000. while the deposits 

 and liquid assets have dropped by 

 ;£ 1 8.000 to under ^7370.000. The stock 

 on hand has also risen by ^^7000 to 

 i7i7i.ooo. but the sundry debtors have 

 fallen away by about £^14,000 to 

 ^7213.000. The report mentions the pur- 

 chase of the assets of the Maitland 

 Brewery. This, however, was not com- 

 pleted in the September half-year, and 

 the accounts are accordingly not af- 

 fected. 



\'irtually all the assets belong to the 

 shareholders for the liabilities to sundr)' 

 creditors are under ;£"43,6oo. After al- 

 lowing for the preference capital of 

 ;£^5 50,000 which has first call, there re- 

 main surplus assets of over ;^i, 298,000 

 for the ordinary shareholders, about 

 23/7 per share. At the time of writing 

 these shares are being offered at 42'-. 

 which includes a goodwill of 18/5 per 

 share. This is the aggregate approxi- 

 mate to the net earnings of the past 

 5| years. Holders of the preference 

 shares are asking 35/ — a high price 

 for a stock carr}-ing an 8 per cent, per 

 annum dividend, and with a fixed assets 

 value of 20s. Still, holders presumably 

 consider that the prospect of the pre- 

 ference dividend being further increased 

 warrants them in asking this price. 



