"BATS "PROSPECTS
One can always look for optimism` from Sir Hugo Cunliffe-Owen, and the stockholders of the British-American Tobacco Company have had good cause for believing that his optimism was justified. In its latest accounts, it a true, British-American Tobacco has shown a reduced prof' and the ordinary dividend is down from 20 to 19 1-6 fer cent., but this is not a fair measure of the company's achievement. As Sir Hugo explained at the annual meenak the profit reduction, in spite of abnormally difficult nadn!. conditions, was due entirely to increased taxation, and as the ordinary dividend is paid free of income tax the gross yield to stockholders was greater in 1938-39 than ir 1937-38. Stockholders are also benefiting from the board' past conservatism, which has enabled the dividend rat for the year to September 30th, 1939, to be held very do%
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FINANCE AND INVESTMENT (Continued from page 9o) to net earnings while accumulated profits are drawn on to the extent of £500,000 in providing for contingencies. That transfer is for the purpose of writing down invest- ments in foreign countries to a conservative valuation.
As for the outlook, Sir Hugo is cautiously hopeful. War has closed some sources of raw materials but others are being found. Duties on tobacco are being increased and taxation eats more deeply into profits when they have been earned. Even so, however, it appears that this com- pany's business, which is almost wholly for export, has promising prospects. Like most other front-rank industrial equities " Bats " Li ordinary units have drifted downwards in recent months. They are now quoted at L4i to yield about 4 per cent. net or 6 per cent. gross. They are worth holding.
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