VICKERS, LIMITED

Dominion, Volume 21, Issue 188, 11 May 1928, Page 13

VICKERS, LIMITED

STRONG FINANCIAL POSITION. Vickers, Limited, the world-famous British armament, steel, and shipbuilding company, have just published their report and balance-sheet covering the year ended December 31 last. They make a very satisfactory exhibit. Gross protits, after deducting all expenses, amounted to £1,275,1)95, as compared with £846,072 iu 1926. After payment of debenture interest and allocating £llO.Oll for depreciation, the net- protit is £992,985, an increase of £430,701 on 1926. The sum of £238211 is placed to reserve fund, which, with £61,789 standing to tlie credit of the insurance fund, but now no longer required, is brought up to £500,000. Dividends on the ordinary shares are resumed witli a payment of 8 per cent., but the earnings were substantially larger than this payment would indicate. “The Times,” commenting upon the company’s report, says:—

“What a company earns on its ordinary capital is really more important than the rate of dividend it pays, for the former is the more accurate measure of its prosperity. No wellmanaged company distributes profits up to the hilt, but reserved profits are none the less the property of the shareholders, the advantages of which accrue to them in the future. . . The strengthening of the reserve fund is a wise and prudent step, for the company's former reserves were largely reduced in connection with the financial reconstruction. The profits have been derived entirely from trading and dividends on investments, the profits on the sale of investments having been transferred to capital reserve account.”

As from January 1, 1928, the company's main trading activities have been transferred to Vickers-Arm-strongs, Limited, a company which has also acquired from Sir W. G. Armstrong, Whitworth and Co., their armament, shipbuilding, and engineering works at Elswick and Openshaw, arid the naval shipbuilding yard on the Tyne. Vickers, Limited, hold twothirds of the share capital of VickersArmstrongs, Limited, receiving for the fixed assets £2,000,009 7 per-cent, cumulative A preference shares, £1,500,000 of 6 per cent. B cumulative preference shares, and £5,000,000 of ordinary shares. The fusion of the armament, steel, and shipbuilding interests of the company with those of Messrs. Armstrong, Whitworth, is expected to bring substantial benefits, since it will permit of considerable economies in working, and other advantages.

Vickers are now making arrangements to transfer the company’s aviation works at Weybridge to a new subsidiary company, which will be called “Vickers Aviation, Limited,” and it is also proposed to transfer the business at Crayford to a new subsidiary company, to be called “Vickers (Crayford), Limited.” It is considered that it will be more convenient and economical in working if these businesses are constituted as separate companies. Vickers, Limited, is rapidly'assuming the position of a holding company, and its investments in controlled companies, which now amount to £12,124,421, or more than half the total assets, will be increased as a result of the VickersArmstrong fusion. As “The Times” points out, the financial position of Vickers is one of exceptional strength, which is 1 argely the result of the successful reconstruction carried out two years ago. Its cash assets, consisting of money at the bank, British Government securities, and bills receivable, exceed £3,500.000. The total of the balance-sheet is £22,068,378. The accounts include, as usual, a consolidated balance-sheet, showing the combined assets and liabilities of Vickers and its subsidiaries. The figures are as follow: — LIABILITIES.

Share capital of Vickers £ Ltd 12,46S,96S Share capital of subsidiary companies (held outside the group) 138,58-1 First mortgage debenture stock and accrued interest (Vickers Ltd.) 3,284,784 Debenture issues of subsidiary companies (held outside the group) 107,142 Reserve fund (Vickers Ltd.) 261,7S9 Creditors and credit balancesVickers Ltd 2,055,616 Subsidiary companies ... 1,291,657 Contingent and other liabilities, including balance of capital reserve (Vickers Ltd.) 2,232,776 Final preference dividends of Vickers for year to Dee. 31, 192", payable March 30, 192S 201,595 22,042,911

Surplus— £ (a) Balance of prolit and loss a/e, Vickers (subject to appropriation) • 709,663 .(b) Balance of profit and loss a/cs. and reserve funds of subsidiary com962,698 panics £1,672,361 (c) Amount written off in Vickers’ books, being differ1 ence between book value of assets (less liabilities) of subsidiary companies and estimated actual 285,729 1,958,090 value £24,001,001 ASSETS. £ £ Land. buildings, machinery, tools, plant, housing estates, etc. — 3,229,236 Vickers Ltd. . Subsidiary companies • ••« 3,736,117 6,965,353 Stocks of steel, iron, timber and other materials and work in progross, less instalments received — 889,963 Vickers Ltd. . Subsidiary companies .... 1,563,355 2453,318 Debtors — Due to Vickers 2,384,628 Ltd Due to subsidiary com1,887,939 panies .. • • 4,272,567 Investments (at cost or market price, whichever is the lower) — Held by Vickers 782,525 Ltd Held by subsidiary companics 3,392,729 4,185,251 Cash at bankers and in hand — 1,256,881 Vickers. Ltd. , Subsidiary com1,606,548 panics .... 2,863,429 Bills receivable — Held by Vickers 154,973 Ltd Held by subsidiary com4,242 panics .... 159,215 British Government securities — Held by Vickers 2,135,751 Ltd Held by subdiary com1,041,270 panics .... 3,177,021 £24,076,157 Less bank loans and overdrafts of subsidiary companies .. 75,156 £24,001,001 These figures show that the floating assets exceed current liabilities and loan capital by £9,956,2 70. —(Published by arrangement.)