10 OCTOBER 1941, Page 22

FINANCE AND INVESTMENT

By CUSTOS

THE Treasury has bided its time shrewdly before turning on the National War Bond tap it shut off in the middle of August, the interval both the old War Bond issues have established small premiums in tolerably free market dealings and gilt-edged prices have improved. Conditions are therefore ripe for the new 21 per cent. series, 1949-51, now announced. With a maximum life 9 years 91 months these bonds will appeal to the banks and other institutional investors who have recently had to be content with the longer-dated 3 per cent. Savings Bonds. Given anything like a reasonable chance by the news from the war front, gilt-edged should react favourably to this latest operation. Other_ markets are now less under the lead of gilt-edged than some few months ago. They derive their inspiration more directly from the \vat news, the main stimulus to investment being the willingness to pay for post:war recovery prospects.

ASSOCIATED BRITISH PICTURE RESULTS Results announced by the leading cinema groups in recent weeks emphasise the strong recovery in the fortunes of din industry which set in with the full in aerial activity early din year. Thus, even for the year to March 3t st, which included the difficult autumn and winter period, the Associated British Picture Corporation, one of the "Big Three" in the British cinema trade, shows a rise of £6,000 to £1,427,157 in its consolidated trading revenue. Depreciation called for £286,885, against £255,706, and there was a sharp increase in the tax charge. Net available profit was therefore reduced, and there will be no sl,irPrise that the board has decided to adopt a conservative dividend policy. Pre- ference shareholders again get their full payment, but there is nothing for holders of the £2,000,00o of ordinary capital.

In the light of these figures the purchase price of 9s. each paid by Warner Bros. for a substantial block of the company's 5s. ordinary shares may look unduly high, especially as the deal did not give the buyers any sort of control. From a long-ferm stand. point, however, this operation may easily prove a profitable one. The group's finances are being gradually strengthened and the post-war earnings prospects are good. At the current market price of 7s. 9d. A.B.P. 5s. ordinaries are fairly valued for the present and dividend chances are discounted some way ahead.

• R.M. AND E.D. VALUATIONS

After the recent liquidation payments one would have expected that market interest in the shares of the R.M. and E.D. Realisation companies would subside. On the contrary, strong buying has lifted RM. from 2s. 6d. to 4s. 6d. ex the liquidation dividend and E.D. are firm at is. 6d. One wonders how much of this support may have been influenced by the idea that these con- panies are still shipping concerns benefiting from the improved conditions now prevailing in the shipping industry. This is no !onger the case. A glance at the assets remaining in the handl of the liquidator, Sir William McLintock, shows that both R.M and E.D. are now primarily property-owning companies. The main asset of R.M. is some 340,000 Li shares in Anglo-Foreign Properties ; E.D.'s chief holding is some 130,Ooo shares in the same concern.

This company was formed two or three years before the w1t to take over various properties in the group and, I believe, va1 conservatively capitalised. . In anything like normal circumstance! its Lx shares might well be worth their par value. Through 1 purchase of R.M. or E.D. the speculatively-minded can hit! Anglo-Foreign Properties shares at a substantial discount. Both these two Realisation companies have a capital of Li,000,000 in Lx shares. With R.M. at 4s. 6d. we have a market valuation of £250,000 put on a holding of 340,000 Lx shares in Anglo- Foreign Properties,-or just under 15s. each. E.D. at is. 6d. 011 a market valuation of £75,000 against a holding of 130,000 Anglo' Foreign Properties shares, or about xis. 6d. each. On this basis it seems to be good business to switch out of R.M. into E.D.

COSSOR PROFITS

Since the new management took over, A. C. Cossor, the radio and electrical manufacturers, have made steady progress. Total profits were £87,878 in the first period of the new compan51 trading, £136,027 for the year to March 31st, 1940, and £157,7 for the year to March 31st, 1941. Taxation has cut into the at able balance pretty deeply, but the dividend on the 5s. or shares is comfortably maintained at 15 per cent., leaving L29,95 to be carried forward against £21,883 brought in. Both the operating subsidiaries are now making profits, and it is evident from the rise in the stock and work in progress items in the consolidated balance-sheet that the group's activities are ezPant ing. In war conditions the earnings prospects are obviously go, although dividends will be limited by taxation and the need 10 employ resources- in the business. Post-war prospects for concern of this kind seem to me to be reasonably bright, et allowing for the likelihood of keen competition. The 5s. shares, at 7s. 6d., yielding io per cent., are worth holding.