FINANCE AND INVESTMENT
By CUSTOS
NEWS from Russia has not brought any general decline in the stock markets, but has shifted the buying emphasis from equities back to gilt-edged. Pressure of funds seeking employment in a market where holders are reluctant to sell and the new securities offering are practically limited to the Government's tap loans is bound to keep prices up ; for the moment, however, the investor's mood is one of caution. A more enterprising policy will soon be apparent whenever the war news offers the slightest encouragement
ENTERTAINMENT BOOM
When the Associated British Picture Corporation, one of the "Big Three" among British cinema concerns, announces a 15 per cent, ordinary dividend after coming under conservative financial management, one needs no further proof of boom conditions in the entertainments industry. Trading profits of the group, struck after providing unspecified but probably quite considerable sums for E.P.T., rose during the year to March 31st from £1,307,017 to kx,579,549, and after charging 4573,012, against £477,166, for income-tax, net profit applicable to the parent company was up from £192,263 to £4o8,o68. There is a further transfer of £100,000 to general reserve, which now stands at L1,450,000 ; but in the consolidated balance-sheet the total of mortgages, debentures and secured indebtedness, although reduced during the year by £800,486, is still as high as L7,991,175.
Business, it seems, is still brisk despite the recent increase in entertainments tax, which, the A.B.P. chairman tells us, the public has met "not with resistance but with resilience." Gross earnings should, therefore, be maintained at a high level so long as there is no heavy air-raiding. On the other hand, shareholders are warned that the incidence of too per cent. E.P.T. is such that net profits available for distribution in the current year are likely to be "some- what lower" than those just announced. Clearly, then, the /5 per cent. dividend rate is likely to be a war-time maximum, for which reason it seems to me that the 5s. ordinaries, yielding 51 per cent. at 13s. 9d., are pretty fully valued. Investors seeking capital appre- ciation in this field might consider Stoll Theatres LI shares at 7s. 3d. or the 6 per cent, cumulative los. preference shares of Twentieth Century Cinemas around 3s. 6d. Neither of these shares is in the dividend list at present, but both have recovery chances.
AMALGAMATED PRESS PROFITS
Anybody who has been bewildered by the spectacular recover? in publishers' profits in the past 18 months should read Lord Camrose's speech at the Amalgamated Press meeting. He made it plain that two major economies had contributed to the results which had enabled the company to resume ordinary dividends with a pay- ment of 9 per cent. One was the elimination of unsold copies ; the other the suspension of contents bills, both "thoroughly un- economic" items of expenditure which had cost the publishing trade large sums in pre-war years. With ordinary dividends on KellY's Directories to come into revenue this year, the immediate prospect looks good, and it would not be surprising if the dividend rate welt raised to, say, to or ii per cent. At Lis. 3d. the los. ordinqries are a promising holding.
CELANESE DEVELOPMENTS
Shareholders in British Celanese, who have been eagerly awaiting a plan to deal with the heavy dividend arrears on the second preference capital, may regard the company's announcement of a new L300,000 subsidiary as rather an anti-climax. Nevertheless, the move is interesting and may well become important. The new subsidiary, Celanese Plastics Development, marks a stage in the research work put in in recent years in the plastics field, and should
• ultimately make a useful contribution to revenue. Meantime, interest will be refocussed on the possibilities of a funding scheme for clearing off the second preference arrears. With 8s. net of arrears due to them, holders of these shares should see a substantial rise in price over the next iGy months. On the basis of current earnings the full 71 per cent, rate should be comfortably earned, and that alone justifies a price of at least 25s. without putting any value on the arrears. Today's quotation is 23s. 9d.
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