Vickers Hard Hit

Hawke's Bay Tribune, Volume XV, Issue 216, 11 December 1925, Page 5

Vickers Hard Hit

A Huge Loss

FIVE UNLUCKY YEARS.

THE CONTRIBUTING FACTORS. t ßy Cable—4?reBa Association—Copyright.) (Received 11, 9.5 a.m.) London, Dec. JO. Mr. McK. mna’s committee attributes Vickers' huge loss, firstly, to world reduction or armaments expenditure; secondly, to foreigners manufacturing tlieir own armaments; thirdly, to the decline in shipbuilding; fourthly, to foreign competition in world markets; and fifthly, to financial stringency and European political unrest restricting cred it.

The company experienced five unlucky years, lhe management had not the special experience necessary to direct such large industrial undertakings, particularly during the period of protracted severe depression.— (Sydney “Sun” cable.)

D R A ST 1C R ECON STRUCTION PROPOSED.

WRITING DOWN OF CAPITAL. London, Dec. 9. Drastic reconstruction of Vickers, Limited, is recommended by the commission appointed to inquire into tho company’s financial position, in consequence of reduced earning power arising from the post-war depression.

The commission advises that the capital be written down by £12,500,000. Far-reaching changes in the methods of control are recommended, including the dismissal of redundant officials, shutting down of plants, and the wind ing up of all unprofitable subsidiary and affiliated enterprises. The commissioners are of opinion that the foregoing will enable the company to resume dividends. The chairman of Vickers, in circulating the report, points out that a reduction of capital is essentially a book entry and does not affect the intrinsic value of the firm’s assets. The scheme of writing down assets makes the £1 share worth 6/8.

The “Daily News” says this drastic pruning of capital merely means a reduction of £1 shares, which touched 57/- in 1919 and are now £7, to then nominal value The deficit will be further met bv an appropriation of £3,600,000 from reserve, and taking £632,000 from the profit and loss account. Three management boards, dealing respectively with industrial, armament and shipbuilding finance, will be established, owing to criticism that the management is inadequate to control the vast organisation. The report has caused a sensation in the business world. It is signed by Mr. Dudley Docker. Mr. Reginald AlcKenna and Sir William Blender.—(A. and N.Z.)