FACTS FOR INVESTORS.

Auckland Star, Volume LXIV, Issue 100, 1 May 1933, Page 4

FACTS FOR INVESTORS.

BRITISH TOBACCO CO. SCRIP HIGHLY-PRICED. The latest issue of "Jobson's Investment Digest" contains details and comparisons ot the balance-sheet of British Tobacco Co. (Australia), Ltd.'s subsidiaries, namely, W. D. and H. 0. Wills (Australia), Ltd., British-Australasian Tobacco Co. Proprietary, Ltd., and States Tobacco Co. Proprietary, Ltd. Commenting on the general position, the "Digest" says:— "The subsidiary companies do not publish their profits and it is therefore impossible to make any exact comparison of the results of the past year with those of previous periods. It appears, however, that there was a further substantial decrease in the net earnings. In the l!)ol year the admitted earnings of the holding company were £326,745 below' those for 1930. At the same time the disclosed reserves in the subsidiaries dropped in tho aggregate by £120,609, which suggests that they were drawn upon to pay the dividend to the holding company. The admitted net profits of the holding company for 1932 fell away by £162,628, but less was drawn from the visible reserves of the subsidiaries, which in all are down by only £10,200 on the year. The subsidiaries, therefore, have not, in the past two years, earned sufficient to provide for the dividends of the holding company, even though the rate was reduced from 12 to 8 per cent in 1931 and to 6 per cent in 1932. "The current price of 35/ for the ordinary shares is substantially greater than the net .tangible assets, after deducting goodwill, patent rights, etc., in the subsidiaries. These assets are about 14/9 per £1 ordinary share, subject to such goodwill as there may be in the fourth subsidiary, S. T. Leigh and Co., Ltd., whose accounts are not published. The market's valuation of the goodwill is in the aggregate about £8,225,000, equal to over nine and one-half years' purchase on the average of the past three years' admitted profits, and oyer fourteen years on those for the past year."