FINANCE AND INVESTMENT In a more favourable market environment Imperial
Tobacco kr ordinary units would have responded to the announcement of the maintenance of the 25 per cent. tax free dividend. Allowing for the final dividend and cash bonus included in the price the units yield just under 4 per cent. tax-free, equivalent to nearly 5+ per cent. gross, slimly an attractive return on the equity of a company with an impregnable balance-sheet and a progressive record of earn- ings? The actual figure of profits for the year to October 31st is not yet available, but as the combined appropriations to reserve and carry forward, at £443,000, are £65,000 less than for 1936-37, and the dividend is accounted for gross, it is apparent that the net profit, after tax, was reduced by £65,000 to £10,685,000.
This fall in profits is, however, nominal in the sense that it masks a further increase, to a new high level, in the com- bine's trading results. Last year's earnings had to face not merely a full twelve months', against only seven months' charge for N.D.C., but a higher rate of income-tax. If allow- ance is made for these two charges, it will be evident that earnings, before taxation, have almost certainly risen quite appreciably, thus confirming the chairman's hopeful forecast at the last annual meeting. It thus appears that the burden of a higher average cost of leaf was more than compensated by a substantial increase in the combine's turnover.
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