FINANCIAL NOTES
OVERSEk FACTORS IN MARKET - DEPRESSION.
BOTH business and prices on the Stock Exchange have left much to be desired during the past week, and events overseas have emerged as the main cause of disturbance. As far as this country is concerned trade indices remain favourable enough apart from the possibility of some new labour trouble and the effect of higher production costs on industrial profits. Foreign news, on the other hand, has been definitely dis- couraging. Severe labour disturbances in the United States, which have communicated their direct influence to the London Stock Exchange through some heavy falls among American stocks, remain as an impediment to activity, and the civil war in Spain is still a potentially depressing influence. These have been reinforced during the past week by a fresh flight from the franc, and renewed reports from Johannesburg of fresh financial difficulties in that centre, doubtless an aftermath of the recent " gold scare." This combination of adverse oversea developments is quite sufficient to have kept most markets inactive and dull.
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RISING PAPER COSTS.
The problems which were successfully met during the past year by the directors of Albert E. Reed and Company, the paper manufacturers, exist in smaller or greater degree in many other branches of industry. Mr. A. Ralph Reed, the chairman and managing director, told shareholders at the annual meeting, reported in another column, that the big advance in prices for wood pulp, the Company's principal raw material, was the outstanding feature of the year's trade. Costs in this direction had increased from 5o to too per cent. during the twelve months to the, end of March last, and had since risen still further. Mr. Reed attributes this partly to increased cost of pulp production, but more to combined action on the part of pulp producers and to a strong demand, particularly from the United States market. In view of the strong opinions recently expressed upon the inherent strength of the pulp market, however, it is notable that Mr. Reed considers current prices to be much higher than can be justified on economic grounds. He said that it cannot be supposed that present prices will continue indefinitely, and that the problem of forward buying is, therefore, all the more difficult. In addition to higher prices for pulp, the Company has had to meet increased prices for coal and other materials and supplies, and a larger wages bill. Increased outgoings, however, have been met by higher selling prices and by forward buying of raw materials, and the chairman gave an encouraging account of prospects during the current financial year.
In the absence of any unexpected burdens on the Company's business it is hoped to place satisfactory results before share- holders even allowing for the fact that an additional 300,000 ordinary shares will then rank for dividend. By the time of the next meeting, the extensions at the Aylesford mills, • for which the new capital was mainly required, should have been completed. The new plant is expected to increase total- pro- duction by approximately 25 per cent., with substantial benefit to the profit earning capacity of the Company.
* * * * HOUSING " BLACK-COAT " WORKERS.
In connexion with its issue of 4j- per cent. Loan Stock, the British Housing Corporation has issued an interesting brochure setting out its objects. Although this Corporation is registered under the Industrial and Provident Societies Acts, it is rather different in character from most other Property Societies similarly registered. The aim of the Corporation is to provide suitable dwellings to " black-coat " workers, conveniently situated in relation to their places of business, at rentals of around ki per week. It is claimed that the work of the Cor- poration has a distinct national value in that it will assist in the solution of the overcrowding problem by providing accom- modation on a suitable rental basis for those whose incomes prevent or should disqualify them from occupying subsidised houses. The sponsors of the Corporation hold that this alternative accommodation should enable Local Authorities to obtain possession of subsidised houses where occupied by persons now able to pay an economic rent. The first issue of the Corporation's 4-1- percent. Loan Stock is limited to £25o,000, offered at par in units of £5.
The rules of the Corporation confer borrowing powers ur to £2,000,000, evidently with the object of providing for expan- sion of the Corporation's activities in the future, and the
brochure gave no indication of the extent to which, in the exercise of these powers, assets could be mortgaged in priority
to the Loan Stock. A limited number of ordinary shares in the Corporation, of £t each, are to be issued, applications from holders of the Loan Stock receiving preferential consideration., (Continued on page 1172.)
FINANCIAL NOTES
(Continued from page 1170.) SOUND RUBBER FINANCE.
During the twenty-eight years of its existence, the United Sua Betong Rubber Estates has proved its high earning capacity, and Mr. J. G. Hay, the chairinan in his speech at last week's annual meeting, discussed the financial policy of the board, which has contributed to the company's success. Profits advanced during the past year to £132,436, compared with £85,013 in the preceding twelve months, enabling the board to increase the total distribution to 131 per cent. against to per cent., despite the larger amount of capital ranking for dividend. A. sum of k2o,000 is transferred from profit to general reserve, and the chairman told shareholders that the board would have liked to make that amount more, but made a liberal dividend distribution in view of the former lean years through which shareholders had passed, and also because earning prospects during the current year are reasonably encouraging. Mr. Hay analysed the company's reserves, totalling over £1,300,000, and showed that of this amount all but the general reserve of £i8o,000 was either tied up in the company's fixed assets or earmarked for specific purposes. Nevertheless, the general reserve represents a respectable sum, even for a company of such considerable size, and, as Mr. Hay remarked, the financial position is one of unusual strength.
A. H. D.
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