THE VICKERS REPORT

Dominion, Volume 22, Issue 186, 4 May 1929, Page 12

THE VICKERS REPORT

STRONG FINANCIAL POSITION

The report of Vickers, Limited, the world-famous shipbuilders, armamentmakers, engineers, steel-makers, and owners of other large businesses, covering the year 1928 has just been published. Its outstanding feature is the very strong financial position of the company which it discloses. This is the result mainly of the reforms which have been introduced in the last few years, the company having taken a .leading part in the rationalisation movement in British industry. The total of the company’s balance-sheet is £21,268,040, of which £12,506,662 represents fixed assets and £8,761,378 the amount of the floating or liquid assets. As against these liquid assets, the current liabilities amount to only £4,283,854. Of the floating'assets no less than £5,415,665 is in cash and Government securities readily realisable. The strong financial position of the company places it in the position to finance easily any business that may be forthcoming. As regards the fixed assets, the values attributed to them in the bal-ance-sheet are very conservative. Thus £11,999,380 of preference and ordinary shares that Vickers hold in Its principal subsidiary, Vickers-Armstrongs, Limited—the company which operates the combined shipbuilding, armament, and steel-making businesses —are entered in the balance-sheet at only £6,189,355. Shares of a par value of £3,251,150 preference . nd ordinary, in the new subsidiary MetropolitanCammell Carriage, Wagon and Finance Company, are given a book value of £2,721,813. Investments in other subsidiary companies have a book value of £3,595,493. The balance-sheet is more informative than in the past, it having been drawn up in accordance with the provisions of the new Coihpanies Act, the coming into force of which has been anticipated by the directors. The arrangement of the accounts has also been simplified and made clearer. The trading profit, after deducting all expenses, including management, lor the year 1928 was £1,249,214, which compares with £1,275,995 in 1927. In this figure the profits of subsidiary companies have been included to the extent of the dividends declared by them in respect of the year after deducting the aggregate amount of those making losses, which amount has been written off the book values of the shares in and loans to those companies. After payment of debenture interest, directors’ fees, and income tax, the net profit is £939,903, as against £992,985 In 1927 and £562,284 in 1926. The directors have transferred £250,000—as against £238,211—t0 reserve fund, and again recommend a dividend of 8 per cent., less tax on the ordinary shares, which absorbs £262,730. This leaves £217,704—as against £208,772—t0 be carried forward. “The Times,” in commenting upon the report, pointed out that the company earned approximately 16 per cent, but was actually distributing about halt This it described as “a sound and prudent policy.” The profit for the year includes the proportion of profit accrued and due on work in progress on December 31, 1927, which in accordance with the agreement for sale to Vickers-Arm-strongs, Limited, was to be retained by the vendors, together with the profits on certain contracts not transferred to the new company. The retention of such profits has reduced the earnings of, and precludes the distribution of any dividend by, VickersArmstrong, Limited, in respect of the year 1928. This means that the profits shown by the balance-sheet of VickersArmstrongs, Limited —a copy of which is appended to the Vickers report in accordance with an undertaking given at the time of the fusion—are much below the normal profits which are to be expected in the future. VickersArmstrongs report a net profit of £169,765, which is appropriated as follows: £105,000 is placed to renewals fund, and £64,765 is carried forward. The balance-sheet shows a total of £18.503,008, of which £5,246,515 is represented by floating assets. The creditors amount to £1,015,341. Last December Vickers-Armstrongs, Limited, with the approval of Vickers, Limited, disposed of its Sheflield and Openshaw Works, together with the business carried on thereat (with the exception of certain armament business), and the stamping department at Elswick to the English Steel Corporation. which lias been formed to consolidate the industrial steel iuterests of Vickers. Limited, Vickers-Arm-strongs, Limited, and Cammell Laird and Co. As previously announced, the railway rolling stock interests of Cammell Laird and Co. have been amalgamated with those of the Metropolitan Carriage, Wagon and Finance Company, under the title of the Metro-politan-Cainmell Carriage, Wagon and Finance Company. In accordance with the custom of the directors, the report includes a statement of the combined assets and liabilities of Vickers, Limited, and its subsidiary companies on December 3L 1925, which is appended.—(Published l>y arrangement.)