Financial Notes

SUBDUED MARKETS.

HITLERS bombshell of last Saturday may be said to have had the effect of checking business in the Stock Markets rather than of occasioning any extensive realisations. For this, one or two _reasons are responsible. In the first place, speculative positions experienced a shake-out a fortnight ago and markets were, therefore, less vulnerable to any unfavourable develop- ments. In the second place, however, while the seriousness of Germany's action was fully realised, there was also a feeling that it had brought Europe face to face with realities and that while the position must necessarily be one of considerable tension for some time to come, there was at least a hope of the outcome being of a favourable character.

AN INDUSTRIAL RECOVERY.

A year ago the annual report of Swan, Hunter and Wigham Richardson, Limited, showed evidence of improvement, and this is still more apparent in the latest report, showing that the profit, after provision for depreciation, was £206,692 against £111,189 for 1934. The Ordinary dividend has now been raised from 3 to 5 per cent. for the year, in addition to which £50,000 has been placed to the Reserve. Even so, the balance carried -forward of £35,255 compares with £26,280 a year pre- v:ously. The Directors state that the tonnage launched

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Financial Notes

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during the year from the Company's Tyne and Clyde yards aggregated 77,957 compared with 43,767 for 1934. * * BRITANNIC ASSURANCE.

The accounts of the Britannic Assurance Company for the past year are excellent, for records have been established in several directions. At the recent annual meeting the Chair- man stated that the net new business in the Ordinary Branch of £3,654,000 was the highest in the company's history, while in the Industrial Branch they had had the largest normal increase in the past fifteen years. Moreover, the expense ratio in the Industrial Branch showed a substantial reduction and had, he said, been brought down to the record low figure for the company of 34.39 per cent. * * * *

TOBACCO PROFITS.

I remarked sonic time ago in these columns that we should have to substitute " There is nothing like tobacco " for the old saying " There is nothing like leather," and further evidence of the good profits secured in the tobacco industry was furnished by the latest dividend of Godfrey Phillips Ltd. The dividend itself of 10 per cent. is the same as a year ago, but this year it is accompanied by a bonus of 11 per cent., making 111 per cent. in all. This is the highest distribution since 1926. At the present quotation of 46s. 6d. the £1 Ordinary shares give a yield to the investor of about 4; per cent. * * * * BUILDING SOCIETY PROFITS. -

The latest report of the Halifax Building Society shows continued activity and prosperity. No fewer than 35,166 new mortgage advances were granted during the year for a total of £21,712,000, while the total amounts outstanding on mortgages were £85,942,000, an increase on the year of £7,843,000. The accounts also show total assets of £108,087,000, compared with £102,798,000 in the previous year. Reserve funds increased during the year by £564,000 to £4,418,000.

STEEL PROSPERITY.

Further evidence of the recovery which is now taking place in the heavy steel industries has been afforded during the .past week by the profit statements of Baidwins Ltd. and of the Lancashire Steel Corporation. In the former company a dividend is announced of 71 per cent. on the Ordinary capital as compared with only 21 per cent. for the previous year; while for some years, of course, no dividend was paid at all. Meanwhile, there has been a drastic capital reconstruction, but nevertheless the Ordinary capital now ranking for dividend is over £1,700,000. In the case of the Lancashire Steel Corporation, which was formed to acquire the iron and steel businesses of Pearson and Knowles

Coal and Iron, Wigan Coal and Iron and the Partington Steel and Iron Companies, a dividend on the Ordinary shares is now recommended of 4 per cent. The companies referred to were reorganised under the auspices of interests associated with the Bank of England, and during the past five years the reorganised company has re-equipped and reorganised the whole of its principal works. The present dividend is the first to be announced on the Ordinary shares.

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Ax INSURANCE DIVIDEND UP.

During the past week the Directors of the Eagle Star and British Dominions Insurance Company have announced a final dividend of 21 per cent., making the dividend for the year 1935 up to 25 per cent. Moreover, a first interim dividend is announced for the current year of 61 per cent. actual, or at the rate of 25 per cent, per annum. If this should be followed by a final dividend of 21 per cent. a year hence, the shares will be placed on a dividend basis of no less than 271 per cent. per annum.

* * * *

STUPENDOUS FIGURES.

The Prudential Assurance Company seems to go from strength to strength in its records of business, and last year the results eclipsed all previous results. The total assets at the end of the year were £302,303,253, being an increase for the year of £11,778,913. Thus, for the first time, the Pruden- tial has exceeded the £300,000,000 mark. The annual income for the year was at the rate of more than £1,000,000 weekly, and in the Ordinary Branch the new business exceeded £28,700,000 and in the Industrial Branch /56,500,000. The life claims paid, including matured endowments, reached a total of £27,400,000. The valuation revealed a surplus of £3,347,451 in the Ordinary Branch and of £6,364,904 in the Industrial Branch, including the undivided balances from the last valuation. In the Ordinary Branch bonuses are repeated at £2 Os. per cent. on whole life and £2 per cent, on endowment assurances, while in the Industrial Branch the bonus is raised to £1 12s. per cent. as compared with £1 10s. per cent., except for policies in the Irish Free State. A further good feature in the report is the reduction in the expense ratio in the Industrial Branch to 23 per cent. of the premium income. This ratio has fallen steadily since 1920, when it was 401 per cent.

* * * * BANKING IN CHINA.

As was to be expected, the latest balance-sheet of the Hong- kong and Shanghai Banking Corporation is chiefly affected by the severe depreciation in the Chinese exchanges. While, therefore, in currency, the balance-sheet total is actually higher at 1,051,501,314 dollars against 947,962,128 dollars, in sterling the total is £68,457,117 against £80,971,765. As the capital of the Bank is in Chinese dollars, the lower exchange causes an apparent shrinkage in the total on conversion into sterling. The sterling reserve, however, while unchanged in sterling, is now worth nearly 24,000,000 dollars more than it was in Chinese dollars. The dividend for the year is £5 10s. per share, against £6 per share, while a further sum of 1,000,000 dollars has been written off premises `* in addition to a transfer made from allocations in previous years for a contingency which has now become non-existent." The balance now carried forward is 3,327,000 dollars against 3,295,000 brought in. Having regard to the disturbed conditions in China, both financial and political, the report is not only as good, but even

somewhat better than might have been expected.* * *

SCOTTISH INSURANCE RESULTS.

The quinquennial valuation by the Scottish Life Assurance Co. resulted in a distribution to the participating policy- holders of a reversionary bonus of 42s. per cent. per annum, calculated on sums assured. This is 6s. per cent. less than five years ago, but it is declared in face of a reducticn in interest rates, against which provision has been made accordingly. The rate of interest assumed in the valuation has been reduced to 21 per cent. instead of 3 per cent, for the Life policies and the latest mortality experience has been adopted—namely, the new British Offices, 1924-29 Table, the net result being to strengthen the reserves. The inter- mediate bonus for policies becoming claims by death is £2 per cent. and for maturing endowment assurances, 42s. per cent. The new business for last year reached a fresh high record of £2,374,404 and the funds increased by £383,812. The proportion of profits to shareholders is 5 per cent. and the Board recommended a dividend of 5s. per share or 20 per cent. for last year. The capitalisation is also recommended of £12,500 of profits to be applied in paying up 5s. per share of the uncalled capital, making the shares £1 10s. paid. It is anticipated for the remainder of the quinquennium, the dividend will be 5s. 6d. per share less tax as usual.

A. W. K.