10 APRIL 1936, Page 36

Financial Notes


DEVELOPMENTS abroad have again been the mainspring of seettrity price fluctuations, and since the events of the past week have been interpreted favourably, quotations have tended to recover, although business has remained small. In addition to the hope of an ultimate settlement of the Rhineland impasse, the Stock Exchange has been affected by the renewal of doubt concerning French finance arid the future of the franc, and although this has been responsible for some general unsettlement, it is believed to have brought in a Continental demand for British Government and in- dustrial securities. Several domestic factors have also contributed to the firmness of markets. The surplus dis- closed in the national accounts for the financial year 1935-36 created a good impression, especially in the gilt-edged section. where the floating supply of --stock is said to be relatively small, and a' demand has been reported- for some of the

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Financial Notes

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recently issued Corporation stocks—obviously a reflection of the absence for a few weeks of new issues of this type. Markets throughout seem to be in a fairly sound technical position, with purely speculative operations for the rise on a small scale, and rises in some industrial shares attributed to the closing of bear" positions.


One of the favourable influences in the industrial market has been the knowledge that the recently issued reports of industrial undertakings, while showing largely increased profits in the majority of cases, do not generally tell the whole story of trade recovery, which has continued unabated since the closing of the last accounts of most public companies. This aspect of industrial finance is exemplified by the experi- ence of Associated Electrical Industries, Limited. The company doubled its dividend a year ago, paying 6 per cent. on the ordinary shares,compared with 3 per cent. in 1933. For 1935 there was another increase to 8 per cent., and Sir Felix Pole, the chairman, stated at the annual meeting last week that output was maintained at a high level, and the orders in hand at the end of 1935 showed an increase on the figure at the end of the preceding year. Since that time, the company's prosperity has advanced still further, for Sir Felix added that for the first three months of the current year the orders received were materially greater than in the first quarter of last year. Encouraging statements on these lines, concerning undertakings of national importance, naturally have an effect on market sentiment generally, as well as on the shareholders immediately concerned.


Some interesting facts concerning the recovery of the Vickers group of companies during 1935 were given to share- holders of Vickers, Limited, at last week's annual meeting. General the Hon. Sir Herbert A. Lawrence, who presided, was naturally far from taking credit to the board for the recovery ; yet his speech showed in many directions how far directorial confidence and energy had contributed to the group's efficiency, which have enabled it to derive full benefit from better trading conditions. The Vickers chairman admitted, as he has done on previous occasions, that the prosperity of the company is largely dependent upon armament work, but he also indicated the large percentage of other engineering products turned out at some of the works which it controls, and his detailed account of such products, given in another part of his speech, showed that this work is both important and diversified. He assured shareholders that the directors of Vickers are fully alive to the _necessity for developing the commercial engineering side of the group's activities during the period of increased armament production which is now in prospect. In view of the remarkable recovery which the company and its associates have achieved, largely through their own preparedness, there is no room for doubt that this policy will be carried out with foresight and efficiency.


Remarkable progress is being made by the English Electric Company, the latest report for the year 1935 showing that there was a trading profit for the year of £263,000, as com- pared with 1172,000 in the previous year and with a loss of 1176,000 in 1933. The balance-sheet is also a good one. liquid assets standing at £1,391,000, being a rise for the year of £157,000. A previous debit balance of £245,000 has now been changed into a credit balance and, therefore, it is of interest to note that the net profit earned last year was equivalent to a full Year's Preference dividend, plus almost 4 per cent, on the Ordinary Shares. Since the report was issued the Company has announced the conversion of out- standing 51 and 6 per cent. Debenture Stock into a new 4 per cent. Debenture Stock at the price of 98 per cent. The Company, therefore, should benefit by a future reduction in its fixed charges.

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In view of the growth in the Fixed Trusts movement it is not surprising that there should now appear a Fixed Trust Year Book, published by Spottiswoode, Ballantyne at the price of 10s. and edited by Mr. Francis Lewcock. The examina- tion by the Editor of the Fixed Trust security from the banking point of view is interesting, and the view is taken that Fixed Tau.sts meet so large a definite public need that there is con- siderable scope for expansion. The second part of the book is devoted to a detailed analysis of each of the Fixed Trusts.

A. H. D.