FINANCE AND INVESTMENT
By CUSTOS
THERE is no denying that in the first round of the post-war currency negotiations gold has fared remarkably well. In both the Keynes and the White plans the role of gold as a basis for credit and in the final settlement of international balances is indicated, and nothing has happened in the discussions of the past few month; to give the gold share investor any cause for alarm. On the contrary, the price of the metal in the few markets where speculative activity still has a reasonably free hand has soared to a point at which questions are again being asked as to whether the producers of gold are not likely to come off well after the war. Sensing her strategic position, South Africa has already opened up negotiations with the British Treasury aimed at obtaining a share in the large profits arising from the sale of her output at current high prices in the Indian market.
RECORD DIAMOND PROFITS
As might have beep expected from the raising of the deferred divi- dend from 40 per cent. to 70 per cent., the full accounts for 1943 of De Beers Consolidated Mines show that profits easily established a new record. Last year the diamond account yielded no less than £4,558,178, against £2,64,9o4 in 1942. Taxation absorbed a large slice of the additional earnings, the provision under this head being £i,800,000 against £752,000, but even allowing for this and for the transfer of £304,423 to general reserve, the higher dividend on the deferred shares was amply covered, and the carry-forward has been increased from E984,756 to £1,095,129. The balance-sheet position is one of exceptional strength in tffat, apart from general reserves and unappropriated profits, amounting together to £2,095,329, special reservei stand at £458,926, and there is a reserve of £6,238,837 against holdings in diamond mining companies and kindred interests. This fully covers the book value at which these investments are carried in the balance-sheet, while diamonds on hand appear at the nominal figure of Li.
Last year's profits were based on record diamond sales of £20,000,000, and although this total may be maintained in 1944 it would be optimistic to assume that the same level can be reached in post-war conditions. Meantime, the immediate outlook is un- doubtedly favourable, and it would not be surprising if deferred shareholders received something more than 70 per cent. this year. Quoted just under £20, the deferred shares are offering a yield of over 81 per cent., without allowing for Dominion tax relief.
UNIT TRUST COSTS
The Municipal and General Securities group of Unit Trusts, which is responsible for the management of something over £7,000,000 of sub-unit holders' capital, is to be congratulated upon blazing the trail in the presentation of annual accounts which tell sub-unit holders the full story of the managers' remuneration. While it is true that war-time conditions are abnormal in that no ne,.v sub-units are being sold owing to the Treasury ban on new capital issues, the figures presented for 1943 do not suggest that any ex- cessive profits are being made out of this pvticular form of invest- ment direction and supervision. Last year's turnover of sub-units in this group was about double in value that of 1942, and this was the thief factor in increasing the gross income of the manager; of the group from £9,314 to £12,074, and in raising the net profi', after covering overheads and salaries, from £276 to £3,335. The accountancy problem involved in furnishing the kind of inforthation which sub-unit holders require has been tackled effectively, anl although the figures are inevitably very different from those to whies investors in public companies are accustomed, they fulfil their pus - pose. On an investment fund of over £7,000,000 a net profit A £3,335 accruing to the managers cannot appear as anything but 3 most moderate reward.
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