FINANCIAL NOTES
DISCOUNT RATES RISE
ONE of the striking features of the weeks of crisis has been a revival of the discount market, a part of the City's equipment which had been almost submerged by the new financial tech- nique. The Treasury had last week to pay nearly 195. per cent. per annum for the money it needed to borrow on three months' bills, whereas three weeks earlier the rate was in the neighbourhood of los. per cent. Only about £55,000,000 was offered to the Government on three months' bills last week whereas three weeks earlier the amount had been about £87,000,000. The rates at which ordinary bills change hands in the discount market have naturally shown a similar move- ment, and I per cent. discount is now the usual rate for three months' bills as against fi per cent. discount which was the prevailing rate until the crisis reached its acute stage.
It is a tribute to the efficiency of the new monetary technique that in a week when the country has seemed to be on the verge of war the Government can still borrow for its short-term requirements at a rate of less than I per cent. per annum. Such a rate bears little relation to the losses which the market might have sustained had war broken out and the bank rate been sharply raised, though one may be permitted to doubt whether bank rate would have been moved even in those circumstances. The rate is still too low to allow the discount houses to earn anything more than a meagre profit at their legitimate business of borrowing money at J per cent. and using it to discount bills. They will still have to rely on gilt- edged investments for the bulk of their earnings.
HARRISONS AND CROSFIELD
It is common knowledge that investment trusts reflect the peak of a trade boom only when they re-distribute to their own shareholders the increased dividends which they have received from their investments. The long lag between good trade and good dividends is probably part of the explanation for the excellent results now shown by Harrisons and Crosfield, the big rubber and tea agency company. Net profit, after tax, for the year ended June 30th actually shows a small increase at £333,87o, against £329,014, notwithstanding the larger amounts which must obviously have been set aside for taxes. The final Deferred dividend is being maintained at 20 per cent., again making 25 per cent. for the year, and despite the fall in share values there is still an appreciation on the balance-sheet figures, leaving the investment reserve of £35o,00o intact.
The Deferred dividend is not so favourable as it was last year becasue the unissued Deferred capital out of which the stockholders are allowed to take half of any dividends in excess of to per cent. at par is now approaching exhaustion and is not to be increased. The price of the Deferred stock is also lower, so that the bonus is reduced. Last year the stockholders received 7f per cent. in Deferred stock, then standing at about £6 I2S. per Li unit, and 17f per cent. in cash. This year they get about £19 I2S. per cent. in cash and about £5 8s. per cent. in stock standing at £4. Next year they will have to rely wholly on their cash dividend.
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ODEON THEATRES PROGRESS
Presiding at the first annual meeting of Odeon Theatres, Mr. Oscar Deutsch was able to repeat, and indeed to emphasise, the prospectus estimate that in a full-year's working the profit should amount to £46o,000. He indicated that since the new financial year began on June 26 the results from both the owned and the managed cinemas had shown a material increase over those of the same theatre for the same period last year. In addition the company now has the benefit of those theatres which were not in operation for the whole of last year. Mr. Deutsch indicated that the 10 per cent. dividend represents the distribution of only about half the profit and that the directors intend to follow this conservative policy.
J. D. M.
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