23 FEBRUARY 1940, Page 32


In these days of high taxation record trading profits do not always imply an increase in the net amount available for dividends. The English Electric results for 1939 provide a striking illustration. Last year this company's trading profit rose from £667,6o3 to the record total of £694,215, but since taxation called for £210,000 against £50,000, lnd the depreciation allowance was raised by 2:14,247 to £80,247, the net balance available for ordinary dividends was actually £146,053 lower than in 1938. Fortunately, the board has followed a conservative policy in recent years, with the result that after adding another 1,100.000 to general reserve, it has been able to maintain the ordinary dividend, on an enlarged capital, at to per cent.

(Continued on page 266) FINANCE AND INVESTMENT kContinued front page 264) In present conditions it is probably safe to budget on a 10 per cent. dividend rate. On the one hand, war will doubtless bring a satisfactory volume of orders, which should ensure a fairly high level of trading profit. On the other, taxation will eat deeply into these earnings, this company being unfavourably situated in relation to E.P.T. At 3os. 6d. English Electric LI ordinary units yield £6 its. per cent. They should prove a satisfactory holding.