29 NOVEMBER 1940, Page 24



THE City has been so obsessed by the internal problems of financing the war that Lord Lothian's plain words to the United States on the much more vital external problem seem to have taken it aback. There is surely little cause for surprise, how- ever, if things are seen in their true perspective. Heavy purchases of war materials have undoubtedly made serious inroads on Britain's gold and foreign exchange resources, which at the outbreak of war probably amounted to about £600,000,000. To reinforce the position dollar securities have been requisitioned—though by no means all of these assets have yet been sold—to the tune of, say, Li5o,000,000. Even so, the war chest is being steadily and, I imagine, rapidly depleted, and it is a safe guess that some time in 1941 credits will be required. When we are ordering in advance on a long- term programme it is only right that we should keep our suppliers informed as to our finances. It is now for America to consider the position and decide on the appropriate policy.


Heavy taxation, plus the traditionally conservative distribu- tion policy of the subsidiaries, are reflected in a modest con- traction in the earnings of Tube Investments. Net revenue to October 31st is down from £864,865 to £820,930, but stockholders have no cause for worry. As much as £150,000 goes to reserve fund, another Lioo,000 is transferred to reserve against investments, and the ordinary dividend is comfortably held at 231 per cent. Moreover, it is apparent from the con- solidated balance-sheet that there has been further expansion of the group's activities. Stocks and debtors have risen sharply, but the group still disposes of ample liquid resources. Cash is rather higher at £2,392,127, against £2,350,768, the port- folio of investments is £180,000 up at £1,264,139 (market value at August 3rd was £1,302,102), and over £1,000,000 is shown as deposited with the Government in advance of taxation demands.

Here is a strong group obviously well placed in relation to the war effort. In his brief review the chairman, Mr. Arthur Chamberlain, tells stockholders that all thirty works are fully employed and that he finds no reason to alter his dividend fore- cast of a year ago, namely, that there will certainly be no increase, and most probably no decrease, in the existing rate during the war. That means that the yield of just over 51 per cent. at the current price of 85s. is pretty well assured. In view of the group's peace-time potentialities the Li units are a first-class investment.


Like the Central Mining group, Consolidated Gold Fields of South Africa is facing depreciation of investments, and conse- quently, for a company of this kind, the necessity to take a very cautious view of distributable profits. For the year ended June 3oth the profits of New Consolidated Gold Fields, the operating concern, are shown as £739,218, against £1,070,327. Reserve for depreciation has called for £1,370,000, against which the board has drawn on general reserve for £1,000,000. A much-reduced dividend is paid to the parent company, which, in turn, has cut its dividend from 161. to 10 per cent. After the writing off the book figure of investments at June 30th was more than covered by market prices, and since June 30th there has been a recovery of over £2,000,000. The reserve and investment position may therefore be viewed rather more cheer- fully. At £18 Consolidated Gold Fields Li shares offer a yield of just over 6 per cent., and are worth holding for better times.