VICKERS, LIMITED.

New Zealand Herald, Volume LXVIII, Issue 20875, 18 May 1931, Page 5

VICKERS, LIMITED.

(Published by Arrangement.)

STRONG FINANCIAL POSITION.

REPORT FOR 1930. The report arid accounts of Vickers, Limited, for the year ended December*33, 1930, show results which are surprisingly favourable, having regard to the fact that 1930 witnessed an economic blizzard without precedent, both as regards its intensity and area. The net trading profits were £1,173,269, compared with £1,270,999 in 1929, a decrease of £97,730, or about 7.7 per cent. Owing to the raising of in. come tax in last year's Budget, £212,870, against £144,778, is absorbed in taxation, and the balance available for dividends and reserves is reduced from £941,971 to £775,926. The preference dividends absorb £418,190, and £IOO,OOO is placed to the reserve fund, which now amounts to £1,100.000. A dividend of 8 per cent, is declared on the ordinary capital, this being the fourth successive year for which this rate has been paid, while the sum carried forward is slightly larger at £231,970. Lost year the amount placed to reserve was £250,000. The balancesheet of the company reveals a very strong financial position. Indeed, its liquid position is exception'allv good. Floating assets amount to £9,350,300, while the current liabilities are only £2,133.056. The company's holdings of cash and Government securities alone amount to £5,861,368, which is more than ■ sufficient to repay the whole of the debenture capital and the current liabilities. The figures of the balance-sheet are shown in the subjoined table, together with those for the preceding year:— ASSETS. 1929. £ i £ 12,634.747 Fixed Assets 12,621,910 Floating Assets 2,916,418 Sundry Debtors 3,017,146 (including amounts owing by Subsidiary Companies) 553,208 Investments 351,953 312,2-14 Bills Receivable 119,833 Cash and Government Securities—--948,149 Cash at Bankers and in hand £1,232,482 4,264,253 British Government Securities 4,622,595 224,680 Colonial Government Securities 6,290 5,861,368 9,350.300 £'21,883,699 £21,972,210 LIABILITIES. 1929. £ t e 13,218,9G8 Issued Share Capital and Reserve Fund .. 13,468,968 Capital Reserve 2,500,000 3,284,783 Debenture Capital .. .. 3,283,697 4,638,463 Creditors and Provisiqns .. 2,133,055 (including Amounts owing to Subsidiary Companies) Profit and Loss Account—--217,701 Balance brought forward from 1929 .. .. 2-28,754 Add Profit for year ended 31st 941,971 Dec., 1930 .. 775,926 1,159,675 1.004.650 Less Preference Dividends, Year 418,190 1930 .. .. 418,190 686,490 741,495 ' - i To be appropriated as follows: Transfer to Reserve Fund .. £IOO,OOO Dividend of 8% lees tax on Ordinary Share Capital .. 254,520 Carry forward to next year 231,970 £586,490 £21,883,G99 £21,972,210

It may be noted that the item of "Provision for contingencies and balance of capital reserve made on reduction of capital," which stood at £3,266,404 in the accounts for 1929, has disappeared. The explanation Qf\this is that a capital reserve which is held against fixed assets has been created to the amount of £2,500,000, and that the balance of the item has hei>n added to sundry creditors. The new capital reserve will provide a fund to write down fixed assets should such action ever become necessary. The company's fixed assets to the extent of over one-half consist of its holdings in Vickers-Armstrongs, Limited. This company earned a profit last year of £337,407, which sufficed to pay a dividend on its £6,099,839 of 7 per cent. "A" cumulative preference shares, leaving a margin of £18,193. This is added to the sum brought in, making the amount carried forward £60,416. Vickers-- . Armstrongs, Limited, own £1,708,428 of 7 per cent, cumulative preference shares and £3,253,050 of ordinary shares in the English Steel Corporation, which ara valued in the balance-sheet at £4,701,478. Trading losses sustained by the English Steel Corporation have been provided for in the balance-sheet of Vickers-Arm-strongs, Limited. Vickers, Limited, hold £5,849,439 of 7 per cent. -"A" preference shares, £1,500,000 of 6 per cent, cumulative "B" preference, and £5,206,800 ordinary shares in Vickers-Armstrongs, Thi3 holding is valued in the balance-sheet at £6,732,870,- which is equivalent to valuing the 7 per cent. "A" preference shares at par, the "B" preference shares at lis lOd each, and the ordinary shares at nil. The financial strength of Vickers, Limited, is to-day almost unique among the great British companies engaged in the heavy industries. What it means to the company and its customers was emphasised in the following passage in the speech of the chairman, General the Honourable Sir Herbert A. Lawrence, at the annual meeting on March 30: — "Unlike so many large undertakings to--day, we are not at the mercy of either our bankers or our debenture-holders. Provided we are satisfied that the security is adequate, we are able, within certain limits for each customer, to accept contracts on extended payment terms; we are in a position to instal any new plant that may be required if we are convinced that economy in production can thereby be secured; we are in the happy situation of knowing that when some trade revival does take place wo have the necessary liquid capital to lock up in stocks, work-in-progress, and book debts." The interests of Vickers, Limited, are predominantly concerned with armaments and shipbuilding. The reduction in armaments following the Washington Pact has resulted in reducing the present output to a fraction of the pre-war figure. Vickers-Armstrongs being the largest armament firm in the world this con- v traction has affected them in no small degree, but technical superiority enables the company to command its full share of foreign work, and the company has also established itself as one of the leading builders of high-class passenger liners. The company's steel interests produced satisfactory results than in 1929, and its aviation interests again yielded a very satisfactory return. The company not only built the airship RIOO, but also the last winner of the Schneider Cup.