Market report
CUSTOS
Everyone expected the share markets to boil over after the fantastic rise of last week—the biggest for six years—and so they did on Monday morning, but the final results from Glaxo, which were better than the forecast and coupled with an increase in the total dividend from 16 to 18 per cent and a one for four scrip issue, managed to stop the rot for the time being. The decline, however, was resumed on Tuesday and the expectation is that the market will move gradually lower in order to consoli- date itself after its recent boom. AEI has fallen back after its refusal to merge with GEC but this is by no means the end of the story. Shrewd investors are inclined to buy AEI on any size- able reaction and some people are even suggest- ing a reverse takeover—when AEI bids for GEC.
I warned that brewery shares would become weak when the breathalyser test became law and so it happened. Even a marginal decline in the sales of beer can play havoc with brewery profits. The selling of breweries was aggravated by a popular switch to International Distillers and Vintners on the rumour of a bid from Watneys. This was denied by both parties.
The long-awaited 'restructuring' of the Hodge Group turned out to be the contraction of four of the companies into two. The Hodge Group bid for Gwent and West and Anglo Auto for Julian S. Hodge, the banking subsidiary. All this is being done by an exchange of shares. The HODGE GROUP after the acquisition of GWENT will own 62 per cent of ANGLO AUTO. The right of the deferred shares to dividend is being postponed (and written down) until 1970. No dividends being in prospect, the market treated the scheme with lack of enthusi- asm.
The gilt-edged market was slightly happier because the American Treasury Bill rate was only marginally higher for three months bills and lower for six months bills. Most of the 'short' bonds regained their day's losses and there was a rise of in EXCHEQUER 61 per cent 1972 which at 971 returns a gross redemption yield of 6.85 per cent. The yield on the long tap of Treasury 63 per cent 1995/98 at 971 is now 6.95 per cent. The short 'steel' 63 per cent stock issued at 991 is now at a discount of 3.
Company notes
Great Universal Stores achieved another record profit figure in what Sir Isaac Wolfson calls the hardest trading conditions since the war. Mail order—John Bull's topic this week—was the 'most buoyant' division in the group: Gus claims the largest mail-order business in Europe. Hire purchase restrictions were a check on the household stores division, where sales suffered. The balance-sheet total of £109.9 million in- cludes £38.8 million cash.
Mr Isidore Kerman, the chairman of Allied Land Holdings, proposes that the company's freehold properties should appear in the balance sheet at figures shown by a professional valua- tion. The surplus would be credited to general reserve, making it possible to increase the nomi- nal value of the ordinary shares from 2s to 5s, which would give the company trustee status. ALLIED LAND'S interests include a controlling stake in the proposed Brighton Marina.
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