COMPANY NOTES
BY CUSTOS THE attempt at recovery in the gilt-edged market was rudely squashed by Mr. Harold Macmillan at his recent press conference when he referred to the dismal gold returns for August. The loss turns out to be £45 million—nearly half the hard-won gains of the year. The Trades Union Congress with its refusal of wage restraint added to the market gloom and War Loan fell to nearly 70. If the Suez crisis worsens the Market will probably sink through its previous 'lows.' At this unpropitious moment New Zealand has to borrow £5 million in 54 per cent. stock 1978-82 at 964 with a yield to redemption of 5f per cent. There is no longer any talk of the banks buying Government stocks. Nor will the gilt-edged market see any of the sterling money being posted this week to the shareholders of Trinidad Oil, which will probably find its way into equities in North America or Royal Dutch-Shell. The Treasury will gain dollars ($180 million) and Mr. Vos, the ex-managing director, £50,000. The next American acquisition of British oil is said to be Trinidad Petroleum at around 50s. Industrial shares remain firm in the face of a new wage inflation and would probably recover sharply if Colonel Nasser and Mr. Macmillan would only say a few favour- able words. Meanwhile business on the Stock Exchange generally is, as you would expect, almost at a standstill.
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With cinema attendances down by 7 per :ent.—does anyone remember last year's miraculous summer?—it was expected that the RANK ORGANISATION profits for the year to June, 1955, would be lower and the 84 per cent. decline in group trading profits has not surprised the market. But the depreciation charge has jumped and the net profit is down by 37 per cent. Internal re- organisation is still going on—the company might well be called Rank Reorganisation —and it has just been announced that 40 small Odeon and Gaumont theatres are to be closed before the end of October. I had expressed an investment preference for the subsidiary GAUMONT-BRITISH because of Oft rising profits of their Cinema-Television offshoot (incorporating Bush Radio) and of their Optical and Precision Engineering sub- sidiary (now ,called Rank Precision Indus- tries), but I see that the G-B depreciatioR charge has also been raised with the result that net profits are down by no less than 45 per cent. The only Rank company which has been able to increase its profits is BRITISH AND DOMINIONS, which owns the busy Pinewood Studios and the Denham laboratories. We must await Mr. Rank's detailed explanation of the reorganisation at the meeting. Meanwhile shareholders will be grateful to him and to Mr. John Davis for maintaining strong finances. Earnings on the Rank equity came to nearly 52 per cent., covering the 12} per cent. dividend over 4 times. At 8s. the .5s. shares yield 71 per cent. This is none too high, for a larger speculative element has been introduced by the increase in the film production programme. (20 films are being made at Pinewood at a cost of £3 million.) Gaumont-British 'A' Ss. shares at 5s. 6d. yield over 13 per cent., the 15 per cent. dividend being covered 1.3 times. British and Dominions, which is really a prosper- ous property and film printing company, yield over 11 per cent. with the 12s. shares at 7s., their 61 per cent. dividend being covered over twice.
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