Financial Performance
1947/48, 1948/49, 1950/51, 1959-67 and 1980-1993
Financial Results for the Year ended March 31st 1948.
BALANCE SHEET, 31st MARCH, 1948
| LIABILITIES | Authorised Issued and Fully Paid | ||
| Share Capital | £ | £ | £ |
| 350,000 Ordinary Shares of £1 each | 350,000 | 350,000 | |
| Reserves and Undistributed Profits | |||
| *Capital (including Share Premium £35,000) | 179,784 | ||
| Revenue | |||
| Plant Replacement | 30,000 | ||
| General Contingencies | 40,000 | ||
| General | 100,000 | ||
| Future Income Tax | 92,000 | ||
| Profit and Loss Account | 21,986 | ||
| ————— | 283,986 | ||
| ————— | 463,770 | ||
| 813,770 | |||
| Current Liabilities | |||
| Acceptance Credits | 400,000 | ||
| Trade Creditors and accrued expenses, including provisions for Taxation and Deferred Repairs of £168,140 | 1,142,338 | ||
| 5% Mortgage Debenture Stock, unclaimed on redemption | — | ||
| Proposed Dividend | 19,250 | ||
| ————— | 1,561,588 | ||
| *Amount at 31st March, 1947 | 181,034 | ||
| Less Lease, etc., written off | 1,250 | ||
| 179,784 | |||
| Note — Outstanding commitments for Capital Expenditure amount to approximately £120,000 There is an Excess Profits Tax post-war refund due in respect of the year ended 31st March, 1946, of approximately £7,538 | |||
| 2,375,358 | |||
| ASSETS | Valuation 31st Dec., 1935 | Additions less Sale at cost, since | Depreciation provision to date | |
| Fixed Assets | £ | £ | £ | £ |
| Land and Buildings | 65,256 | 101,294 | 18,512 | 148,038 |
| Plant and Machinery | 35,730 | 286,247 | 122,019 | 199,958 |
| 100,986 | 387,541 | 140,531 | 347,996 | |
| Loose Tools, Patterns, Transport and Office Equipment at cost, less amounts written off | 51,830 | |||
| 399,826 | ||||
| Investments | ||||
| Subsidiary Company, at cost | 500 | |||
| Other Companies at cost, less amounts written off (Market Value £12,549) | 95 | |||
| ————— | 595 | |||
| Current Assets | ||||
| Stock-in-Trade and Work-in-Progress, as valued by the Company's Officials | 1,373,496 | |||
| Sundry Debtors, Payments in advance etc., less provisions and including £128,362 due from Holding Company | 587,836 | |||
| Subsidiary Company — Loan Account | 69 | |||
| Cash at Bankers and in Hand | 13,536 | |||
| Cash at Bankers against unclaimed 5% Mortgage Debenture Stock Redemption | — | |||
| ————— | 1,974,937 | |||
| 2,375,358 | ||||
Disposal of each pound of income for the year to March 31st 1948 was as follows:
| Wages and salaries, after P.A.Y.E. Materials and services Maintenance of buildings and plant Depreciation of Buildings and Plant Taxation Shareholders' Dividends Retained in the business TOTAL |
3s. 11¼d 13s. 0d 6¾d 4½d 1s. 6d 2d 5½d 20s 0d |
Source: Paxman's World, No 3, October 1948, pp. 16-17.
Financial Results for the Year ended March 31st 1949.
Reproduced below is a report published in the September 1949 issue of Diesel Railway Traction (page 167). The Chairman pulls no punches when expressing his views on government taxation in the final paragraph.
Presiding at the AGM of Davey, Paxman & Co, the Chairman, Mr H Riggall, said that their sales last year were a record. Net profit was £305,780, as compared with £75,413 for the previous year, and with the balance of £21,987 brought forward, the total available profit was £327,767. The directors proposed to allocate £280,000 to reserves, and to pay dividends of 10 per cent on the ordinary and 4½ per cent net for six months on the preference shares, leaving a balance to carry forward of £24,186. Analysis of disposal of each pound of income for the year to March 31st 1949 which was derived almost entirely from sales of their products, showed: -
| Wages and salaries Materials and services Maintenance of buildings and plant Depreciation and replacement reserve Taxation Retained in the business Dividends |
4s. 1d 11s. 7d 3d 8d 2s. 2d 1s. 1d 2d £1 - 0 - 0 |
20.4% 58.0% 1.2% 3.4% 10.7% 5.7% 0.6% 100% |
The Government was, in effect, at least an equal partner in the profits of the company, but provided no capital, and was, therefore, immune from losses, and it did no ploughing back, taking its cash shortly after the financial year end.
Financial Results for the Year ended March 31st 1951.
Reproduced below is a report published in the September 1951 issue of Diesel Railway Traction (page 218).
The trading profit of Davey, Paxman & Co Ltd for the year ended March 31, after charging depreciation and special depreciation set aside for increased replacement cost of plant, was £303,737 as against £432,316 a year ago. To the trading profit there is added the income from investments, and after allowing for taxation, there remains a net profit of £105,151 against £191,433. After bringing in the sum of £43,082 from last year, there is available £148,233, which the directors propose to appropriate as to £65,000 to general reserve, and £27,562 to the payment of a dividend of 10 per cent.
Financial Performance - 1959 to December 1967
The following information has been extracted from the Directors' Report and Accounts of Davey, Paxman and Company Limited for the "Fifty-two weeks ending 30th December, 1967". It is of particularly interest because it reports on the first full financial year following the English Electric takeover and shortly before the GEC takeover in 1968. At the back of the Report is a Ten Year Review which gives information for the years 1959 to 1966 inclusive. Unfortunately the Review does not include the gross turnover for each year but it does show the number of employees. Information in the ten year review is provided below . It appears that up to March 1966, the Company's financial year ran from 1st April to 31st March following. The company became part of English Electric in 1966 and the next set of accounts cover a 39 week period from 1st April to 31st December that year. The subsequent set of accounts covers the 52 weeks from 1st January to 31st December 1967.
| 1959 £ | 1960 £ | 1961 £ | 1962 £ | 1963 £ | |
|---|---|---|---|---|---|
| Net Earnings | 309,342 | 191,995 | 217,613 | 156,002 | -91,002 |
| † Taxation (net of tax deducted from Dividends) | 91,163 | 7,734 | 51,971 | 27,637 | +57,938 |
| Net Earnings after Taxation | 218,179 | 184,261 | 165,642 | 128,365 | -33,064 |
| † Dividends Paid (Gross) | 140,000 | 140,000 | 140,000 | 140,000 | 140,000 |
| Earnings Retained in the Business | 78,179 | 44,261 | 25,642 | -11,635 | -173,064 |
| Net Current Assets | 2,931,744 | 2,851,508 | 2,928,376 | 2,922,699 | 2,609,146 |
| Ratio Current Assets to Current Liabilities | 3.75 | 4.00 | 4.11 | 3.09 | 2.17 |
| Land, Buildings, Plant and Equipment | 1,176,618 | 1,226,655 | 1,177,179 | 1,147,222 | 1,208,652 |
| Ordinary Share Capital and Reserves | 3,473,657 | 3,517,918 | 3,543,560 | 3,531,925 | 3,358,861 |
| Book value per Ordinary Share | £2.48 | £2.51 | £2.53 | £2.52 | £2.40 |
| Ratio of Gross Dividend to book value Ordinary Shares | 4.03% | 3.98% | 3.95% | 3.96% | 4.17% |
| Number of Employees | 2,226 | 2,259 | 2,205 | 2,298 | 2,339 |
1964 52 weeks £ | 1965 52 weeks £ | Group Mar. 1966 52 weeks £ | Group Dec. 1966 39 weeks £ | Group Dec. 1967 52 weeks £ | |
| Net Earnings | 89,489 | 472,340 | 603,004 | 656,839 | |
| Subvention Payment | — | — | — | 68,000 | |
| † Taxation (net of tax deducted from Dividends) | +38,000 | +115,500 | 123,541 | 209,289 | |
| Net Earnings after Taxation | 127,489 | 587,840 | 479,463 | 379,550 | |
| † Dividends Paid (Gross) | — | 280,000 | 280,000 | 322,000 | |
| Earnings Retained in the Business | 127,489 | 307,840 | 199,463 | 57,550 | |
| Net Current Assets | 2,359,290* | 2,522,690 | 2,667,433 | 2,699,930 | |
| Ratio Current Assets to Current Liabilities | 2.03 | 2.61 | 1.79 | 1.57 | |
| Land, Buildings, Plant and Equipment | 1,142,621 | 1,120,244 | 1,191,274 | 1,350,815 | |
| Ordinary Share Capital and Reserves | 3,034,350* | 3,175,373 | 3,384,957 | 3,561,995 | |
| Book value per Ordinary Share | £2.17 | £2.27 | £2.42 | £2.54 | |
| Ratio of Gross Dividend to book value Ordinary Shares | — | 8.82% | 8.27% | 9.04% | |
| Number of Employees | 2,298 | 2,196 | 2,421 | 2,528 |
* After Special Stock Provisions of £452,000.
† For comparative purposes dividends have been shown gross and the taxation charges adjusted accordingly.
Detailed information on the financial results for 1967 are to be added to this page in due course.
Financial Performance - 1980 to 1993
From 1968 to September 1989 Paxman was a wholly owned subsidiary of the General Electric Company (GEC) of Great Britain and its financial results were consolidated into GEC accounts. In 1989 Paxman became part of the joint venture, GEC Alsthom, and its accounts were consolidated into those of the holding company as before. However during the 1980s and early 1990s Paxman issued an Annual Report to Employees which summarised the financial performance of the businesses based on the Colchester site. The figures and information given below are reproduced from those Annual Reports to which I have had access.
Paxman's constituent businesses, diesel engines, filtration and control equipment, each involved the manufacture of high value capital equipment and the provision of related services. A great deal of interest and emphasis therefore focused on Orders or 'order input' as well as Sales Turnover, both of which could vary widely from year to year. A large order, for example, could provide a baseload of work for the factory for as long as 18 months or a couple of years. A particular difficulty facing this type of business is maintaining cash flow and a skilled workforce when one large contract is coming to an end but there is not another lined up to follow it. Orders for major items of capital equipment are heavily influenced by national and international economic factors and politics, matters completely outside the manufacturer's control.
Paxman's financial year ran from 1st April to 31st March. All figures shown below are in GBP £million.
| Year | Main Engines | Spares & Service | Filtration | Regulateurs Europa | Total | |
|---|---|---|---|---|---|---|
| 1980/81 | Orders | 18.9 | 16.7 | 1.6 | 2.6 | 39.9 |
| Sales T/O | 25.5 | 19.5 | 1.1 | 2.8 | 48.9 | |
| 1981/82 | Orders | 11.6 | 19.1 | 1.0 | 2.7 | 34.4 |
| Sales T/O | 23.1 | 17.8 | 1.2 | 2.9 | 45.0 | |
| 1982/83 | Orders | 17.0 | 19.0 | 1.7 | 3.0 | 40.7 |
| Sales T/O | 19.6 | 16.1 | 1.6 | 3.2 | 40.5 | |
| 1983/84 | Orders | 16.1 | 33.1 | 1.5 | 3.3 | 54.1 |
| Sales T/O | 20.0 | 22.4 | 1.6 | 3.4 | 47.4 | |
| 1984/85 | Orders | 24.9 | 20.8 | 1.3 | 3.6 | 50.6 |
| Sales T/O | 19.1 | 27.3 | 1.0 | 3.5 | 50.9 | |
| 1985/86 | Orders | 13.9 | 23.3 | 1.0 | 3.6 | 41.8 |
| Sales T/O | 19.7 | 23.7 | 1.8 | 3.7 | 48.9 | |
| 1986/87 | Orders | 27.8 | 2.2 | 3.3 | 33.3 | |
| Sales T/O | 31.3 | 0.9 | 3.1 | 35.3 | ||
| 1987/88 | Orders | 53.6 | 1.8 | 3.8 | 59.2 | |
| Sales T/O | 53.4 | 2.3 | 4.1 | 59.8 | ||
| 1988/89 | Orders | 39.3 | 3.2 | 42.5 | ||
| Sales T/O | 49.6 | 3.4 | 53.0 | |||
| 1989/90 | Orders | 40.7 | 3.9 | 44.6 | ||
| Sales T/O | 35.7 | 3.5 | 39.2 | |||
| 1990/91 | Orders | 47.6 | 4.9 | 52.5 | ||
| Sales T/O | 35.3 | 3.8 | 39.1 | |||
| 1991/92 | Orders | 40.5 | 4.5 | 45.0 | ||
| Sales T/O | 49.0 | 4.3 | 53.3 | |||
| 1992/93 | Orders | 27.0 | 4.0 | 31.0 | ||
| Sales T/O | 44.2 | 4.6 | 48.8 | |||
Additional Information
1983/84 - In his Annual Report to Employees Jeff Herbert, Paxman's Managing Director, drew attention to the Company's turnover having grown by £7 million during the previous year - a rise of almost 17%. The main factor contributing to the growth was an increase in trading in the Spares and Engine Overhaul side of the business. A major achievement during the year was Paxman's nomination as diesel engine supplier for the Royal Navy's new Type 23 Frigates. An order was received for thirty two 12 cylinder Valentas, worth in the region of £10 million: delivery to take place over the following four years.
The value of export sales was £10.3 million and domestic sales £37.1 million. Over £1 million was invested in new plant and machinery and £1.8 was spent on new product development.
As at 31st March 1984 the Company employed 1,260 people: 1,013 in the mainstream engine business, 108 in Spares & Service, 91 in Regulateurs Europa's UK business and 19 at Roden, and 29 in Paxman Filtration (at this time Filtration contracted out its manufacturing to Paxman). The annual report also contains a breakdown of employees by function within the main engine business. Of the 1,121 people in this part of the business, 701 were employed in manufacturing, 103 in Technical/Engineering roles, 54 in Finance, 29 in Sales, Tendering and Contracts, 108 in After Sales (i.e. spares and service), 62 in Administration, 15 in Business Systems (computers/IT), and 49 were apprentices and trainees.
How each £ of turnover was used - Materials and Expenses: 56p. Wages and Salaries: 19p. Taxes, Dividends & Reserves: 19p. Pensions and National Insurance: 3p. Depreciation: 3p.
1984/85 - The year saw the completion and delivery of 20 Valenta 1MW generating sets for Royal Navy Type 22 Frigates. Main engine orders were greatly increased due to successfully winning the 48 engine US Coast Guard contract. After Sales orders returned to a more normal level following exceptional ordering in 1983/84 by British Rail, and by the MoD (N) as a result of long engine running hours during the Falklands campaign.
Year to 31st March 1985 - Capital employed: £19.7 million. Number of employees: 1,270.
Where the money went - Materials and Overheads: £29.3 million. Employment Costs: £11.3 million. Taxes, Dividends & Reserves: £9 million. Depreciation: £1.3 million.
1985/86 - In his Annual Report to Employees in Spring 1986 Jack Fryer, Paxman's Managing Director, commented that the diesel engine market had generally shrunk by approximately 40% over the previous three or four years.
During this financial year a total of thirty five 16RP200 Valenta engines were despatched to the United States Coastguard Service (out of a total initial order for 48 engines).
Where the money went - Materials and Overheads: £29.4 million. Employment Costs: £11.8 million. Taxes, Dividends & Reserves: £6.4 million. Depreciation: £1.3 million.
1986/87 - From the start this was expected to be a difficult year as most of the USCG order had by now been delivered and the order book was largely made up of small quantity contracts. The potential problems and financial results were completely overshadowed and adversely affected by the four month lock-out in the summer/autumn of 1986 precipitated by a dispute over overtime working, pay and conditions.
The order book for the Filtration Division was boosted by an order for five de-waxing filters for China.
Capital employed: £29.0 million. Number of employees: 1,278.
Where the money went - Materials and Overheads: £21.4 million. Employment Costs: £10.5 million. Taxes, Dividends & Reserves: £2.0 million. Depreciation: £1.4 million.
1987/88 - During this financial year the Company achieved its best financial performance for at least five years. During the year it booked its largest ever export order - £27 million for 62 engines for the US Coastguard Service. Orders for 12 of these engines were subsequently cancelled when the US Government had to review its spending in the light of major currency fluctuations. When the order was originally signed the exchange rate was USD1.56 to the GBP but by early 1988 it was more than USD1.80 to the pound.
Capital employed: £29.8 million. Number of employees: 1,287.
Where the money went - Materials and Overheads: £37.1 million. Employment Costs: £13.7 million. Taxes, Dividends & Reserves: £7.5 million. Depreciation: £1.5 million.
1988/89 - In terms of Orders Received the Company had a difficult year, particularly compared with the previous year. Orders for new engines were below expectations due to the highly competitive state of the market and various countries around the world delaying major defence spending programmes. However there was strong performance in the spare parts and overhauls business which exceeded expectations. Costs of employment and material costs were significantly higher than in the previous year.
How each £ of turnover was used (1987/88 figures in brackets) - Materials: 54.2p (50.9p). Pay & Benefits: 24.2p (22.9p). Taxes, Dividends & Reserves: 11.5p (12.5p). Overheads: 10.1p (13.7p).
1989/90 - The Filtration Division was sold to Brackett at the beginning of April 1989 and so does not appear in reports after 1988/89.
Capital employed: £22.9 million. Number of employees: 911.
Where the money went - Materials and Overheads: £23.2 million. Employment Costs: £10.7 million. Taxes, Dividends & Reserves: £4.5 million. Depreciation: £1.8 million.
1990/91 - Orders received were 25% higher than the previous year. Notable engine orders were those for US Navy "Cyclone Class" patrol craft (£14 million), for the Korean Navy and Australian Railways.
During the year nearly £2 million was invested in the business. Major items were £885,000 on plant and machinery, £381,000 on office equipment and computers and £457,000 on line tools. Over £2.1 million was spent on product development such as that on the VP185 engine.
Year ending 31st March 1991 - Capital employed: £20.8 million. Number of employees: 803.
Where the money went - Materials and Overheads: £23.7 million. Employment Costs: £10.1 million. Taxes, Dividends & Reserves: £3.9 million. Depreciation: £1.4 million.
1991/92 - In his annual report to employees, Will Pavry, Managing Director, said the financial results for the year ending March 31st 1992 were generally encouraging and showed a considerable improvement in most areas over the previous year. The least satisfactory aspect was in order receipts which were 15% below the level of the previous year and below budget. Engine orders continued to be difficult to obtain.
During the year £2.1 million was invested in the business. Of this £929,000 was spent on major items of plant and machinery, £237,000 on office equipment and computers and £548,000 on line tools. £3 million was spent on new product development.
Year ending 31st March 1992 - Capital employed: £21.4 million. Number of employees: 772.
Where the money went - Materials and Overheads: £32.7 million. Employment Costs: £11 million. Taxes, Dividends & Reserves: £8.2 million. Depreciation: £1.4 million.
1992/93 - Capital employed: £21.0 million. Number of employees: 739.
Where the money went - Materials and Overheads: £29.6 million. Employment Costs: £11.6 million. Taxes, Dividends & Reserves: £6.1 million. Depreciation: £1.5 million.
Capital Investment £3.6 million. Of this £2,482,000 was spent on major items of plant and machinery, £319,000 on office equipment and computers and £420,000 on line tools. Investment in new product development was £3.7 million.
© Richard Carr 2006, 2007
Page updated: 17 MAR 2011