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Aviation History
1948
1948 - 0785.PDF
IT COMPANY MEETING THE DE HAVILLAND AIRCRAFT COMPANY LIMITED Technical and Commercial Strength Notable Export Trade The following is the text of the speech prepared by Mr. A. S.Butler, Chairman of The de Havilland Aircraft Company Limited, for the 28th Annual General Meeting at Hatfield on 25 May, 1948 : In referring to the Accounts for the year to 30th September,1947, as now circulated, our members will see the effect of the very great alteration to the Company's capital structure whichtook place during the year. The issue of 400,000 £1 Ordinary shares in March, 1947, and800,000 Preference shares in June, 1947, doubled the total Capital Issued by raising it to £2,400,000, and increased the PremiumReserve from £700,000 to £1,000,000. It would be appropriate at this time to express your Directors' appreciation of the loyalsupport given at the time of these issues by our shareholders. You may be quite assured that the responsibility implied is fullyappreciated by your Board. f The form of the Balance Sheet has been somewhat altered, as\ iias also the Consolidated Statement. This is partly to meet the requirements of the new Companies Act, which will be operativebefore the publication of our next accounts, but, in addition, the grouping of the Capital and Reserves shows clearly that the totalCapital now employed by the Company amounts to £4,735,424. Correspondingly, the listing of the Fixed and Liquid Assets andthe deduction of the Current Liabilities shows how the total Capital is invested. We have also added a Consolidated Profit and LossAccount which incorporates the trading results of the Group, and shows the total appropriations within the Group for the last year.Airspeed Limited, as a subsidiary company in which we do not hold the major portion of the equity, has again not been includedin the Consolidated Accounts, other than as an investment in the Balance Sheet, and in respect of dividends paid, which areincluded in the Profit and Loss Account. i Dealing with the Company's Balance Sheet in more detail, it! will be seen that the Capital Reserves amount to £1,570,808. The : amount of Excess Profits Tax refunded to date of £224,473, has been expended on new works, and there now only remains a smallbalance payable to the Company in respect of the recoverable portion of the tax for the quarter to the 31st of December, 1946.The item appearing under Capital Reserves of Accumulated Surplus on the sale of Fixed .Assets is increased to £143,192, and is self-explanatory. Subsidiary Companies Investment Reserve remains unchanged at £203,143, but this figure was formerly treated as adeduction from the corresponding Asset. Revenue Reserves and Provisions totalling £764,616 now includean Income Tax provision of £275,000 which is estimated as sufficient to meet our 1948/49 liability. This is the first time that we havebeen able to make a full provision for tax on the current profits, although we have, a? I have mentioned on previous occasions, beenbuilding up gradually towards this position during recent years. General Reserve remains at £350,000, and there is a somewhatlarger balance at the credit of Profit and Loss Account of £139,616, which it is recommended should be carried forward. The Fixed Assets are now shown at original cost less totaldepreciation, and amount to £879,466, an increase of £156,060 as compared with the previous year. During the year under review Lthe Crown Assets purchased from the Government which appearedl^a single item in the previous accounts were allocated under their IWpropriate headings to the various Companies within the Group.The Parent Company's proportion of this settlement accounts for the major portion of the net increase in the value of Fixed Assets.i think you will agree that the position as shown under this heading indicates a conservative valuation of the Assets in question. : Investments Increased in Subsidiary Companies. Shares in. and loans to, Subsidiary Companies show a verysubstantial increase at £2,617,759. This was to be expected as a result of the transfer of all Propeller Work-in-Progress and Stocksto the new subsidiary, de Havilland Propellers Limited, on the 1st of October, J946, when this Subsidiary started operation as acompletely separate entity. Also, there have been further advances to The de Havilland Engine Company Limited, to meet certaincapital expenditure and the increased working capital requirements of that company. It is interesting to note that considerably morethan 50 per cent, of our total capital is now invested in subsidiary companies, the largest portion of which covers investments in thetwo main Subsidiaries, The de Hayilland Engine Company Limited, and de Havilland Propellers Limited. The net Liquid Assets position shows a very great improvementthis year as a result of the inflow of new capital, the surplus having increased by just under £1,000,000 to £1,238,199. The proposednet dividend on the Ordinary Capital of £77,000 has been included as a liability. It is possibly advisable to mention that the presentposition of surplus Liquid Assets is hardly likely to be maintained at the same level, as further capital expenditure, both for the ParentCompany and certain Subsidiaries, has still to be met. It is also estimated that, in line with the statements made in the Prospectusat the time of the issue of the Preference shares, full advantage will require to be taken of the Company's borrowing powers tofinance the volume of orders in hand within the Group. Dividend Maintained on Larger Capital. If I can now refer to the Profit and Loss Account, it will beseen that the Trading Results are better than those of the previous year. This is all the more satisfactory in view of the burden of costwhich arose out of the fuel crisis in February/March, 1947, when most of the Company's factories had to shut down for a shortperiod. 1 should like to take this opportunity of stating that the effect of the stoppage might have been much more serious had itnot been for the tremendous efforts put in by management, staff and workers alike to overcome the loss of production arising fromthis upset. In comparing the results of the previous year's figures it should be borne in mind that the Company must now earn a returnon a much greater capital, and to this extent a strict comparison of the results for the last two years is possibly misleading. The total Net Receipts show an increase of approximately£142,000 at £937,003. This figure is arrived at after charging Wages, Materials, Salaries, Rent, Rates, Repairs, and otherexpenses. Of the further charges to be made against this balance, Depreciation shows a considerable increase as a result of thepurchase of additional Plant and the higher rates of depreciation charged thereon. Contribution to the Superannuation Fund at£19,452 represents the payment for the year of the accounts. Last year the figure charged covered ^1 months to bring the positionup to date. The charge for Employees' Holiday Fund payments at £19,672 shows a substantial reduction, as this year only thoseon the Parent Company's payroll are included, whereas previously payments to the employees of the Propeller Company also appearedunder this heading. After these charges, together with Directors' Fees, Chairman's Remuneration, and Interest and Bill Discount,are deducted from the net revenue, the gross profit before taxation amounts to £776,032, as compared with £628,918 for the previousyear. Of this balance, Current and Future Taxation absorbs £530,861, and, after charging the expenses of Capital Issues of£49,562, the Preference Stock Dividend and proposed dividend on the Ordinary Stock, the balance of profit carried to the BalanceSheet amounts to £114,649, as compared with £30,960. The Consolidated Statement of Assets and Liabilities has beenprepared broadly on the same lines as the Company's Balance Sheet. I do not think it is necessary to remark on individual itemsappearing in this statement, but it is of interest to note that it indicates the strength of the Group as a whole and that the inclusionof the Reserves and Undistributed Profit figures of the Subsidiary Companies raises the total Capital Employed to just under£5,000,000. With regard to the Consolidated Profit and Loss Account, this statement amalgamates the profits and losses of allthe Companies within the Group with the exception of Airspeed Limited, as previously mentioned. It also shows the total taxationcharged and the various appropriations which have been made during the year. In order to keep the accounts in line with theParent Company Accounts, we have charged the proposed dividend on the Parent Company's Ordinary Capital for the year. Since it has been necessary to refer to the somewhat large loss made by one of our Overseas Companies, 1 feel that 1 should tell you that this refers to our Canadian Company, and explain briefly how it comes about. This company's factory and organisation was released fromCanadian Government controllership at the end of the war. The company received a fairly substantial payment in the shape of alump sum in respect of the controllership period, and this left the company with a large balance at the credit of Profit and LossAccount, but with the need to reconstitute itself to meet peace- time conditions. It was also decided to carry out a capital recon-struction by recalling the Preference Share Capital which bore a high rate of interest, and this has now been successfully accom-plished. The cost of this reconstruction and other reorganisation has been heavy, as is indicated by the loss shown in the ConsolidatedProfit and Loss Account. The loss has been written off against the credit at the Canadian Company's Profit and Loss Account, butthere still remains a substantial balance at credit of that account. A Year of Sound Progress. Turning now to the general position, the year under reviewand subsequent months may be described as a period of sound all-round progress in the affairs of our Company, with notableexport business in both*civil and military equipment, a steadily
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