This note discusses the profitability and financing of industrial and commercial companies (ICCs) in 1985.
The main developments were:
- non North Sea ICCs' profitability increased fat· the fourth successive year, with the pre-tax rate of return rising to 8%, the highest since 1973;
- non North Sea profits were boosted by falling prices for oil and imported raw materials, but profits in the North Sea sector fell;
- dividends were up by a quarter and taxes by a sixth;
- fixed investment increased by 8% in value, and by about 2%-3% in volume terms;
- ICCs' retained income and financial surplus fell;
- ICCs raised substantial amounts of external finance both from the equity market and, for the second year running, from banks;
- the value of takeovers and mergers was £7.1 billion, higher in real terms than in any year since 1972;
- both capital and income gearing showed modest rises.