FINANCE AND INVESTMENT
By CUSTOS
As I expected, the recession in the stock markets has not gone very far and most groups are already showing signs of rallying under the lead of gilt-edged. After last week's slide long-dated Government loans have attracted fresh buying based on the view that the powers- that-be could not afford to let prices fall any farther, at least for the time being. Now that many of those wishing to get liquid have switched into the short-dated bonds or Treasury bills the position looks healthy again: I am still prepared, however, for a further period of hesitancy in the speculative sections, although it seems to me to be very unlikely that prices will slip back very far. There are plenty of resources available for investment and they will be put into active employment as soon as their possessors begin to see their way.
THAMES OIL POSITION
If the 1942 results of Thames Haven Oil Wharves have fallen short of some of the more optimistic estimates, they are nevertheless encouraging. Operating profits rose last year from L100,207 to £120,417, and net trading profit was up from £51,812 to £81,137 before providing for taxation. Bank overdraft has been reduced by £101,200 to £416,632 and preference dividends have now been paid up to September 30th, 1942. While it is evident from the balance- sheet that the group's financial position is still in need of strengthen- ing, this company is recovering gradually from the setback experienced in 194o and is beginning to reap the benefits of the reconstruction scheme carried through in that year. At 8s. the 4s. ordinary shares are fully valued on early dividend prospects but may easily turn out well as a long-term holding.
JOHN LEWIS RECOVERY It is apparent from the latest accounts of John Lewis and Co covering the year to January 31st, 1943, that this undertaking had its full share of the improvement in London stores trading. Trading profits rose sharply from £298,928 to L4o3,947, and although the taxation charge was heavier, the amount earned ft dividends was up from £57,204 to £1o7,717. In the light of the figures it is not difficult to understand why the board was able to recommend further substantial payments on account of dividend arrears on the 7 per cent. preference capital. Dividends are now paid up to July 31st, 1941, and I shall be surprised if it is not found practicable to make further progress in bringing matters up to dat in August. In his survey the chairman warns shareholders that trading must feel the effects of the progressive diminution of supplies but the chances seem to be that profits will be sufficient to enabl• the whole of the preference arrears to be cleared off this year. Then the way will be open for a resumption of ordinary dividends which in pre-war years ranged between 8 per cent. and 12 per cent.
A CHEAP PREFERENCE SHARE
A point which emerges from the John Lewis recovery is that the 7} per cent. cumulative Li preferred ordinary shares of th John Lewis Partnership are an attractive purchase for capital appre elation around today's level of 16s. Revenue of the Partnershi depends on the receipt of a dividend on the large holding of Joh Lewis ordinary capital, and as nothing has been rtceived since 194• the 71 per cent, dividend is now in arrears as from December is 1939. These 3} years' arrears, equivalent to about 2s. 6d. ne per share, are included in the price, and it should be well withi the company's power to pay them off quickly in post-war condition Dividends on the Partnership's two classes of preferred ordina capital are covered by a payment of only 5} per cent. on the ordina capital of John Lewis, whereas in pre-war days, as I have stated the actual distributions ranged between 8 per cent. and 12 per cen As a recovery purchase the 71 per cent. preferred seem to me t offer as good value as is to be had in the London Stores grou at current prices.
The fact that goods made of raw materials in short supply owing to war conditions are advertised in this iournal should not be taken as an indication that they are necessarily available for export. 1 I I
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