22 MAY 1941, Page 24


By CUSTOS Crry markets have done well to maintain a fair volume of turn- over and firm prices in face of the counter-attractions of London's War Weapons Week. All the big financial institutions, which have latterly been responsible for the bulk of business in gilt- edged, have been preoccupied with the savings drive, while the smaller investors have been enjoined to put their hands deep into their pockets and take up certificates and bonds. I am not surprised, in these circumstances, that gilt-edged have been dull nor am I prepared to read into the comparative strength of home industrials a switching over of funds into equities. The truth is surely that the people who must have good yields cannot afford to support the savings drive to any great extent by buying the Government's tap loans. They maintain their interest in equities and other higher-yielding stocks. On the other hand, the support normally available for gilt-edged has been switched to ensure the success of Weapons Week. This is a temporary phase. Next week, other things being equal, gilt-edged should be able to capitalise the effect on sentiment of a total of well over Li 00,000,000.

IMPERIAL CHEMICAL PROFITS War conditions have obviously been helpful to the turnover and, consequently, to the gross income of the Imperial Chemical group. Gross income, as disclosed in the 1940 accounts, rose from £15,343,038 to £18,374,945, but taxation has proved to be the villain of the piece. So substantial was the charge for income tax and E.P.T. that consolidated net profit was down from £7,678,000 to L6,756,000. Taxation actually took 70 per cent. of the consolidated income, leaving 25 per cent, for net dividends to stockholders—the 8 per cent. rate on the ordinary is maintained—and 5 per cent, to go to the group's free reserves.

No wonder Lord McGowan criticises the too per cent. E.P.T. He is not against the principle of too per cent, tax on excess profits, but he is severely critical of its effects on the smooth running of business. In his view it leads to stringency in the supply of liquid capital required for development and prevents businesses from providing adequate depreciation on capital ex- pended on war-time projects. As for this year's prospects, the odds are heavily in favour of the 8 per cent, dividend rate being held despite the increasing burden of E.P.T. At 29s. 6d. I.C.I. ordinary Li units are a good investment to yield nearly 51 per cent. The group will be fully employed during the war and will play a big part in post-war reconstruction.


. After reading Mr. F. K. Kielberg's statement, which accom- panies the annual accounts, stockholders in United Molasses will be relieved of any feeling they may have had that the group s profits have been greatly swollen by commissions received from the Government. It appears that out of last year's combined profits only x5 per cent, was accounted for by commissions re- ceived from the Ministry of Supply. Under the war-time agree- ment, however, the company and its various subsidiaries are allowed to buy and sell molasses abroad for their own account and several of the subsidiaries, particularly in America, had a successful year. Like so many other British industrial under- takings United Molasses is writing down the book value of all (Continued on page 566) FINANCE AND INVESTMENT (Continued from page 564) assets and investments held on the Corz:sient. The board has also thought fit to write off or provide for all fixed assets situ- ated in danger zones in other parts of the world. In consequence, the only fixed assets now appearing in the balance-sheet are situated within the Empire or within the United States. The financial position is strong. and the earnings outlook good.


From the 1940 accounts of the National Bank of India it is apparent that, while on the one hand the bank's resources were considerably increased as a result of war-time financing, trade demands on the bank's deposits were reduced by war-time diffi- culties. Deposits at December 31 stood at £34,750,000, against just over £29,000,000 at the end of 1939, but the total of dis- counts and loans was down by roughly L2,000,000. It is sur- prising, in the circumstances' that in spite of a taxation charge " considerably in excess of the previous year's requirements" the bank's profits for 1940 were less than £3,000 lower at L439,943, against £442,692. The 16 per cent, dividend rate is maintained, k5o,00o goes to the staff funds and another £70,000 is written off house property account, leaving £246,515 to be carried forward.


In spite of an unfavourable experience in the fire section, most of the insurance companies transacting a general' business have succeeded in holding their dividend rates. The Liverpool and London and Globe, for example, is again paying 27s. a share, the combined transfers to profit and -loss account from under- writing accounts amounting last year to £644,458, against £782,352 in 1939. Pensions funds receive £too,000, another £too,000 has been written off investments and £5o,000 off house property. The transfer from the fire department to profit and loss account was sharply reduced at £147,661, against £297,248, the accident and miscellaneous section contributed £435,818, against £457,104, while £32,978, against -nil, was transferred from the marine branch. Owing to the increase in taxation both at home and abroad which more than offset the rise in gross interest, the net interest carried to profit and loss at £374,205 was £25,379 less than in 1939. The net dividend, plus debenture interest, exceeded the net interest and life department contribution by £7,464. In his review, which accompanies the accounts, the chairman, Mr. A. Kentish Barnes, disclosed that the estimated total fire losses for the country for 1940, quite apart from enemy action, were £12,640,000, the highest figure for twenty years. He also pointed out that in the general foreign field operations were satisfactory in spite of a reduction of income. The extension of the war in Europe and the deepening tension in the East had affected business but fortunately only to a relatively slight extent. Discussing the progress of the marine section he explained that the profit of £32,978 had been achieved in face of the temporary loss of Continental connexions. The hull, cargo and war risks sections had made satisfactory, progress, especially in the United States.