ARMSTRONG CONTRACTS.

New Zealand Herald, Volume LXV, Issue 19976, 19 June 1928, Page 7

ARMSTRONG CONTRACTS.

LOSSES IN NEW ZEALAND. CHAIRMAN'S STATEMENT. [from our own correspondent. "I LONDON, May 16. Art indication of the losses sustained by Sir W. G. Armstrong, Whitworth and Company, in connection with their contracts for the Arapuni heachvorks and a section of the East Coast railway was given at the annual meeting by the chairman, Lord Southborough. The directors' report referred to provision for anticipated losses on contracts. "Actually the provision in question," said Lord Southborough, "aggregated £364,473. Included in this amount is a sum of £251,973, in respect of further civil engineering department losses, mainly in connection with New Zealand contracts, and the balance represents provision which, on the side of caution, we have deemed it necessary to make in connection with various contracts pertaining to our ordinary business. Government's Attitude. "With regard to civil engineering contracts, we think the end of our difficulties is in sight and that adequate provision has been made against further loss. It is perhaps a negative sort of credit to take, but there is no doubt that our negotiations undertaken by Sir Alexander Gibb and Partners, and later by the Right Hon. Edward Shortt, K.C., on our behalf, saved us from continuing with a situation which had become very acute. It is also appropriate to say here that the New Zealand Government met us in a spirit which we much appreciated." The chairman also mentioned that the building of the battleship Nelson—a.very costly business—had resulted in a substantial loss as to which discussions were now taking place with certain Government departments. He was hopeful that the ! claims would meet with that consideration by the Government to which the directors believed they were fully entitled. Deficit for the Year. The report stated that the profit for the year, subject to depreciation and interest on debenture stocks and loans, was £388,667. From this was deducted £250,000 required to meet certain contincencies, leaving a balance of £138,667. Interest charges for the year amounted to £666,620, so that there is a net loss for the year, before providing for depreciation, of £527.953, which compares with £531.210 for 1926. As a credit balance of £114,182 was brought in, the debit balance is i educed to £413,772. This has been deducted from the general. reserve fund, which now amounts to £86,228. The balance-sheet was ma'de up before the amalgamation of tho armament business with that of Vickers was effected; consequently. the effect of the operation is not shown in the latest balance-sheet. A drastic writing down of the book value of the assets of the company will be necessarv owing to the losses of the past, but the directors do not propose to submit a reconstruction scheme until the company's earning power is more definitely known.