ENGLISH ELECTRIC COMPANY

Dominion, Volume 36, Issue 217, 9 June 1943, Page 6

ENGLISH ELECTRIC COMPANY

Larger Output And Profit

DIVIDEND MAINTAINED Sir George Nelson On Napier

Acquisition

The Twenty-fourth Ordinary General Meeting of The English Electric Company, Limited, was held on February 25th, 1943, at London. Sir George 11. Nelson, M.l.Mech. E., M.1.E.E., chairman and managing director, who presided, said:— The increase of £394,069 in the issued Ordinary stock is a result of the exchange of shares with the holders of Ordinary shares in D. Napier and Son, Limited, about which I will make reference later on. The Debenture debt is reduced by the application of the sinking fund, in accordance twith Hie trust deed. Creditors and reserves are up by £1,381,000, which is largely due to additions to our reserves for taxation, etc. It is not in any’ way due to ordinary trade creditors, which are, in fact,.less than last year. . . , i The substantial reduction in, bank overdraft is not, as might be supposed, a result of a falling, off in work, but arises from the fact .that payment for work done has been accelerated. Under present conditions of working the cash position at any given date offers little clue to the volume of work in hand, as with a large order-book, violent fluctuations are bound to take place. LIQUID/ASSETS.. Our liquid assets— namely excess of cash, stocks, work in progress, and debtors over creditors—amount to £2,928,717, which is practically the same as last year. The general reserve has 'been increased by a further £lOO,OOO, and now stands at £BOO,OOO. * t . Turning now to the assets side of the balance-sheet, the fixed assets show a slight increase over the previous year after applying the depreciation of £lOO,OOO shown in the profit and loss account. This small increase is due to additional office accommodation at two of our factories, necessary to handle our increased turnover efficiently. You will observe a new item under investments —namely, 1,973,981 Ordinary shares of 5/- each, fully paid, in D. Napier and Son, Limited, £493,495. These shares have 'been taken into our accounts on the very conservative basts of par value. PROFITS AND DIVIDEND. Turning now to the profit and loss account, I would draw your attention to the fact that the profit carried to the balance-sheet is £44,956 greater than in the previous year. Of this amount, £18,506 is the net amount of dividend received from our holding in D. Napier and Son, Limited, and the balance of £26,450 is all that we have been able to retain, from a considerably increased output, as a result of the incidence of taxation. We are proposing to you that we shall again pay a dividend of 10 per cent, on our Ordinary stock, winch this year requires £231,718 gross as compared with £192,251 in the previous year. The additional amount is the gross payment required on the increased capital of £394,669 Ordinary stock

’ TAXATION POSITION. I have in previous years made reference to the taxation position, and in particular to that section of taxation which relates to excess profits. You will observe that although we may be faced with the cost of readapting our works to peace requirements and of carrying out much additional research and development in order to attempt to fulfil our policy of providing stability of employment for the loyal employees whose services have 'been of such great value to the country, we have been able to place no more than £lOO,OOO to general reserve after paying the usual 10 per cent, dividend and providing to be carried forward approximately the same amount as we brought in. Moreover, if we had halved the dividend we should have added less than £60,000 to the reserve. As the law stands, there is a hidden reserve, not shown in our accounts, equal to 20 per cent, (less tax) of our E.P.T. payments, and since my reference to this matter a year ago further legislation has been passed _ to make somewhat clearer the intentions of the Government as to the uses to which that reserve can ibe put, or perhaps I should say, can not 'be put. But it is still true that a firm which has a good standard profit but makes no extra war effort can provide more adequately for meeting the post-war situation that one which has a poor standard and has made a great war effort. None of you will doubt that this is obviously wrong in principle. D. NAPIER AND SONS, LIMITED.

You will have seen from the Press and from the directors’ report.that during the year your company, with the good will of the Government, has acquired a controlling interest in D. Napier and Son Limited. Your directors are satisfied that this association will provide greater opportunities for the wide engineering and manufacturing research, knowledge, and experience of both companies to be applied to the advancement of their activities and to the benefit of the country generally. Holders of over 90 per cent, of the Ordinary shares of that company haying accepted the offer to exchange their holdings for Ordinary stock of The English Electric Company, your directors have decided to take the necessary steps authorized by the Companies Act to acquire the remaining shares. DEVOTED WORK OF STAFF AND

WORKPEOPLE. It is always one of the chairman’s most pleasing duties to pay a tribute to the staff and workpeople. To me, personally, it always affords the greatest pleasure to do this, as I am satisfied that no company has been or could be served by a more loyal and conscientious team of men and women. No praise can be too high for their devotion to duty. The Government has shown active interest in works’ coihmittees during recent' times. You know, of course, we have had well organized staff and works committees operating for many years, and a good deal of our excellent team work arises from their activities. These committees continue to function in a splendid manner and will, I am sure, maintain the understanding between our management and workers of all grades, resulting in considerable benefits to the country which we all now serve in our day-to-day activities. SOCIAL WELFARE.

The social welfare of the staff and work-people continues to receive the sympathetic support of your directors. The pension and death benefit schemes, as well as sickness and benevolent funds, have played a large part for some years in sustaining the well-being of y<jur employees and their dependents, I am sure you would wish me to convey to all our employees your best thanks for all their efforts in the past and to express the hope that in the hot too.distant future, their labours may be rewarded by a return to peaceful conditions, and that embarrassment to their future by the present taxation policy will in due course be suitably relieved.

The report and accounts were adopt-