FINANCE AND INVESTMENT By CUSTOS
APART from some activity in Canadian Pacific and other Canadian dollar securities prompted • by reports of a rise in the exchange rate, .the stock markets are following the pedestrian course appropriate to the period immediately preceding polling day. Such selling as takes place is of a purely routine character, and is being comfortably absorbed without much movement either way in prices. Failing some quite unexpected development, such as an international crisis or a serious worsening of the Conservatives' prospects at the polls, I do not look for any material alteration in the level of quotations before the election result is, known, or at least until there is enough
to go on to provide the basis for a shrewd guess. "
RUMANIAN OIL POSITION
It will come as a bitter disappointment to Preference shareholders in Phoenix Oil Products that, following the end of the war in Europe, they are asked to accept proposals for a postponement of the payment of their dividend. The 8 per cent. cumulative dividend on the £600,000 of Phoenix Oil Products Preference capital is guaranteed unconditionally by the Phoenix Oil and Transport Company, whose busineis is situated in Rumania. During the war years the Trans- port Company has been called on to implement this guarantee since the distributing- business of the Products undertaking in various European countries was broUght to an end„ and the dividend could not be paid out of the Products company's liquid resources. From the last balance-sheet of the Transport Company, dated December 31, 1943, it appeared that holdingS of cash and gilt-edged, although heavily reduced, were still sufficient to cover the guaranteed dividend for some time ahead, but now, it seems, the point has been reached when the directors have deemed it inadvisable to make further -pay- ments for the time being.
In seeking a three-year postponement of the fulfilment of the guarantee, the Transport Company's board emphasise that, although its properties in Rumania have now been freed by the Soviet forces, the refineries, tanks and equipment have suffered considerable damage from Allied aerial bothbardment. Moreovel, it appears that the supplying of oil for reparations to the Soviet, together with the demands of the Rumanian internal market, will leave only a small quantity available for export until production can be increased and refining facilities restored. The warning note is sounded that reparation payments by Rumania can only be made by heavy additional taxes on industry, which points to the probability that the British oil companies will have to bear new burdens. Following this announcement the Li Preference shares of the ProdnctS com- pany, which have hitherto received their 8 per cent. dividend under the guarantee, have been marked down sharply from 17s. to !as.. while the kr Ordinary shares of the Transport Company have fallen from 5s. 3d. to 3s. 9d. In view of the uncertainties surrounding the future of British-owned enterprises in Rumania, the Transport Com- pany's shares are obviously very .speculative. There should be some scope, however, for a recovery in the Products Preference, seeing that the distributing business in Europe should be gradually re- established. In pre7war years the Products company covered its Preference dividend out of its own earnings, while it is well to remember that the guarantee, although postponed, still remains in being.
A HEAVY E.P.T. PAYER
Several weeks ago I included Purnell and Sons, the Bristol printers, in a list of companies which are heavy E.P.T. payers, and which therefore stand to benefit substantially when this tax is amended or removed. For the year to September 3o, 1944, this concern has just declared a final dividend of I22 per cent., which brings up the total distribution to I7f per cent., against to per cent. in the pre- ceding year. Net profits, after tax, have risen from £22,940 to £28,585, from which it appears that earnings on the Ordinary capital were equivalent to about 28 per cent. Gross profits have reached a new peak at L428,585, against. £379,779. As much as f,400.,000 was therefore paid in taxation for the past year. It is clear that there is a big tax cushion against a reduction in gross earnings from the abnormal war-time level. During the past few weeks the 5s. shares have risen to 17s. 3d. At this level the yield is just over 5 per cent. In view of the probability of E.P.T. revision, there is scope for a further improvement in the coming months.
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