COMPANY NOTES
By CUSTOS IT haoeen an extraordinarily dull week on the bck Exchange without newspaper comrrnt on the business world. Dealings fell tcthe level of a dull day in the mid- sumirr holidays. But no selling movement develoed and prices moved up in both the gilt-eted and equity share markets. War Loantven touched 851 bid. There was a sharprecovery in the leading oil shares whichas I remarked last week, were look- ing cmparatively cheap. BRITISH PETRO- LEum-ose from over 70s. to 74s, 6d. and BURMS OIL from 105s. to 109s. 6d. SHELL move up 2s. to 128s. Among industrial sharelhere was one notable exception to the sing trend. BRITISH OXYGEN dis- appoited the market by keeping its divi- dendt 15 per cent., although its net profits increted from £1.5 million to £1.9 million. The saves fell from 63s. 6d. to 61s. 3d. A few seeks ago I suggested exchanging from Britis Oxygen into BITTIERLEY, which I hopeiome readers followed. BRITISH ALU- MINIGI, on the other hand, rose sharply from38s. to 42s. 6d. on the unexpected increse in dividend from 10 per cent. to 12 pr cent. Its net profits rose from £440,00 to £720,000.
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Sole of my readers went into Canadian bankshares over a year ago, not for the dividnd yield, which was comparatively low, rut for the capital appreciation which was b be expected from the rapid develop- menbf Canadian natural gas oil and other indutries. They were not disappointed. Over the past fourteen months they have seen:heir shares rise nearly 40 per cent. on the verage. And thanks to 'rights' issues and Dominion income-tax relief the yield on tie average has been well over 41 per cent to a resident in this country. For various technical reasons all the leading bank last year transferred funds from fame reserves to open reserves and brought thei issued capital more into line with their asses. The ROYAL BANK issued one share for five, the BANK OF MONTREAL one for four, the CANADIAN BANK OF COMMERCE one for foil), and the IMPERIAL BANK three for seven. The combined net profits of the chartered ban's over the past ten.years have trebled. Last year they rose only 8.3 per cent., the rise being held down by the heavy tax pay- ments incurred on the transfer of funds from inner to open reserves. What is the prospect for the current year? Generally' speaking, the Canadian banking outlook is not unfavourable, but shareholders can- not expect to see a repetition of the 1954 capital appreciation. I would advise taking some profits and perhaps switching, from Bank of Montreal to Canadian Bank of Commerce. The latter maintained its divi- dends last year at $1.20 against earnings of $2:13. There is scope for a dividend in- crease this year. At 153 the shares yield only 2.75 per cent. flat, but 5,55 per cent. after.Dominion income-tax relief at l ls. 3d-
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When I recommended JAMES PASCALL ls. shares in January last year at 6s. 41d. ex the capital bona' of 25 per cent. I thought there might be still another slice of the melon to carve up. Sure enough another 25 per cent. bonus was declared in Janu- ary, 1955, and the shares are now quoted at 8s. 9d. ex bonus to yield 51 per cent. The bonus record of this highly efficient firm of sweet manufacturers is astonish- ingly good-100 per cent. in March, 1950, 100 per cent. in March, 1951, 50 per cent. in March, 1952, 33+ per cent. in March, 1953, 25 per cent. in March, 1954, and again 25 per cent. this year. Trading profits for the year ended December were 38 per cent. up. Earnings amounted to 212 per cent. and the dividend was raised from 40 per cent. to 50 per cent. These excellent results were achieved in the face of growing competition and in a completely free market: they testify to the high efficiency of the manage- ment and the strong good-will' position which has been built up since the war. Even in the United States the company goes on increasing its sales. Can its success be repeated this year? The company has now to incur heavy advertising expenditure which had been deferred last year, but sales should benefit from it even if profit margins will be lower. On the whole, I would take at least half my profits if I were a holder. The yield is good enough to keep some as a 'sweetener' in more senses than one.
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