Investment and Financial Notes • WirkE I do not by
any means suggest that the disturbance occasioned-by the-devaluation of the franc is a 'matter which is likely. to charige the whole course of investment tendencies, its effect is to make; the immediate coursC'of prices of particular" 'securities extremely uncertain, ` and for that reasoiCI am deferring comments upon particular investments for a week . . or two. At the same time there are,. perhaps, some'-'general observations which may usefully be made concerning_ markets as a.'whole. It is not surtirisini, for instance,' to find that one Of the first ,effects of the- action by France has been to occasion a "ietback in gilt-edged securities: There has iiweb. a :certain- ariount of speculative buying of late, and the mere possibility of French holders realising has been sufficient t§ occasion a hurried closing of some weak positions. In the second place, the possibility of actual French selling is something which cannot be entirely (Continued on—pato 566) = . .;
Investment _and Financial Notes
(Continued from page 564)
left out of consideration. There is little doubt that in the course of the prolonged flight from the franc there has been a good deal of French buying of British Government stocks, and while there may be no immediate desire on the part of holders to transfer their resources to France until conditions in that country have settled down, there may be a wish to take advantage of the present high level of imvestment stocks and to have their resources in liquid form for trans- mission to France at a later date, or even to reinvest here at a lower level
STEEL TRADE PROSPERITY.
Further evidence of the prosperity in the steel industry is indicated in the latest report of the United Steel Companies. Recently, the announcement of a dividend of 7i per cent. on the Ordinary shares as compared with 7 per cent. for the previous year was a disappointment to the market, as a somewhat higher distribution had been expected. The report now jssued, however, ,shows that in this matter of distributing profits the company is pursuing a conservative policy, for the net profit fortthe year was £1,378,587, against £1,115,000 for the previous year. This increase is equivalent in itself to nearly 4 per cent. on the Ordinary capital, ranking for dividend, for the year. Instead, however, of a big rise in the dividend the directors have very wisely carried £400,000 to Obsolescence and Depreciation Reserve, against £275,000 a year ago, while £300,000 is reserved for taxation, against £220,000, and £100,000 is again placed to the General Reserve. Moreover, there is a large balance carried forward of £570,000, while from the profits a sum of £110,000 has been contributed- to the Workmen's Pension Scheme.
The actual output of steel ingots for the year was over 1,500,000 tons, or 150,000 more than in the previous year, while the full effect of the large expenditure on the improve- ments, the directors state, has not yet been felt as regards earning power. The balance-sheet position is a strong one, the total of cash standing at 12,590,000, subject to payment of the final dividend and to receipt of the balance of the new capital money, in which connexion it must be remembered that this year the capital ranking for dividend will be larger, as 2,205,455 shares were issued at 25s. last May, raising the issued capital to very little short of £9,000,000.
At the present price of about 33s. for the £1 share the return to the investor is only about 41 per cent., but there is at least a reasonable prospect of higher dividends in the
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