- FINANCE AND INVESTMENT By CUSTOS
IVIAnicErs are still showing their indifference to international politics and reacting mainly to the growing evidences of inflation. On top of the announcement of higher railway charges comes news of sub- stantial additions to the nation's wages bill, all pointers to the depreciating value of money and the correspondingly greater attrac- tion of ordinary shares as a hedge. I do not believe that inflation of the runaway kind is imminent or at all likely in this country, but I also find it hard to believe that any really deflationary process is going to be set in motion. The moral for investors is that any well- balanced portfolio should contain a fair proportion of equity shares.
EDMUNDSONS ELECTRICITY PROGRESS
Whatever evidence the electric supply industry may bring forward to support its claim to full efficiency, there can no longer be any doubt about the Government's intention to nationalise. Within the next few days Mr. Shinwell will unfold his plans to representatives of the industry, and one cannot do less than assume that his intention is to take over the industry on the distribution as well as the supply side. Meantime, the annual report of the Edmundsons Electricity Corporation throws some interesting light on what can be achieved by progressive management under private enterprise. Among the facts brought to light is a 40 per cent. reduction in the cost of electricity during the past fifteen years, when the cost of living has risen by nearly 4o per cent. While it is true that this reduction in electricity prices reflects the advantages. of a steadily increasing load, it is also true that it has been achieved in spite of a sharp rise in the cost of coal in recent years and that prices -have been held down during the war period when practically every other item in the cost
of living has been moving up.; •
Once again Edmundsons are restricting the ordinary dividend to 6 per cent., a rate which is consistent with conservative finance. Gross revenue from sale of current for 1945 was slightly higher at £11,480,957, against Lt1,358,823, but owing to the increase in generating costs the group's surplus was down from £3,959,539 to £3,423,532. After charging depreciation, contingencies and deferred maintenance and deducting debenture interest and taxation, the con- solidated net profit was down from £922,025 to £783,936. During the current year sales have begun to increase again after their recent fall from their war-time peak. In May sales of the Edmundsons group rose by 14 per cent., mainly as a result of expansion on the domestic side. Coal stocks, on the other hand, have fallen to a dangerously low level which must preclude any further substantial increase until the situation has been put right.
A BASE METAL SHARE
In the recent improvement in the base metal market the los. shares of the Lake George Mining Corporation have moved up from Ss. 6d. to Jos. 6d., but at the current level, only a few pence over par, the shares should still prove a gpod lock-up speculation. Formed in 1937, this undertaking, which owns a large lead-zinc property in Australia, has had an indifferent career and has not yet paid a divi- dend. Indeed, the operating company has a debit balance on profit and loss account which will have to be eliminated before dividends to the corporation; the holding concern, can be paid. There were one or two points, however, in the last report, covering the year to June 3oth, i944, which suggested that shareholders could look for better things. All temporary indebtedness had been repaid, and the chairman emphasised that once the necessary readjustments from war to peace conditions had been made, the milling rate would be raised to full capacity with a marked effect on the profits earned. While the shortage of labour has persisted, I think it is reasonable to look for an improvement in the position to be disclosed in the next accounts and there should be a reasonable rate of earnings at the ,current level of lead and zinc prices. Over a period the shares should establish a good premium over par.
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