Venturers' Corner
Here is a speculation for those who do not mind taking a chance on an international trade revival. With its business centred in the shipment :of machinery and merchandise to the River Plate, Agar, Cross is an export undertaking par excellence. It suffered severely during the slump, with the result that at June 30th, 1936, the balance-sheet showed a debit on profit and loss account of £401,788, an exchange deficiency of £135,912, and a shortage of working capital. Inevitably, the company will have to face a reconstruction scheme to eliminate the intangible assets and enable fresh money to be brought in, Whenever such a scheme is formulated, it will herald a resumption of dividends, as the board is not likely to bring forward a scheme unless earnings can be passed on to shareholders.
The share with speculative prospects is the Lr 8 per cent. second cumulative preferred, standing around par with 51 years' arrears of dividend. Behind the preferred issue is £900,000 in ordinary shares which should bear the brunt of the capital reconstruction when it comes along. Meantime, with its trade entirely in the Argentine, where recovery is already marked, the company is doing better, and exports of agricultural machinery have risen substantially in recent months. The next accounts, covering the year ended June 30th, are due in December and should show a sharp improvement in earnings-sufficient to justify the board in putting forward capital reorganisation proposals. Holders of the second preferred shares may expect to be called upon to make some sacrifice, especially in respect of their dividend arrears, but should retain something worth more than today's price of 20S. The scope for improvement may be judged- from the company's excellent record in the pre-slump years when earnings were sufficient not merely to cover the dividends on the first and second preferred shares, but enabled handsome dividends to be paid to ordinary share- holders. ' A recovery to one-half the pre-slump level would imply a good return to second preferred holders. Cusr0s.
[Readers' enquiries, or requests for advice, regarding particular shares will be answered periodically as space permits. Corre- spondents who do not desire their names to appear should append - initials or a pseudonym c-their.- questions]
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