Document kbkxp446YyY9m5b8EXgj5Gmn

Annual report 1967 Contents Notice of meeting Illustrations of group products Stockholders' diary List of directors and officers Chairman's.letter to the stockholders Group financial highlights Directors' report Appendix to directors' report Group profit and loss account Group balance sheet Company balance sheet Notes on the accounts Auditors' report List of subsidiaries, branches and associates The group's income for 1967 and how it was used Ten-year statistical summary 1958 -1967 Illustrations of group products page 1 2 3 4 5 6 7 10 12 13 14 15 19 20 21 22 24 About Baker Perkins Holdings Limited Joseph Baker & Sons Ltd. was incorporated in 1902 to carry on a business which' had already been a leadingmanufacturer of food machinery for more than a quarter of a century. In 1920 the company amalgamated with Perkins Engineers Ltd. and changed its name shortly thereafter to Baker Perkins Ltd. Following its acquisitions of other companies and. products the Baker Perkins group now designs, manu factures and sells a very wide range of machinery and plant for the bakery, biscuit, chocolate and confection ery, printing, laundry and chemical industries. The group is also a world leader in the manufacture of wrapping and packaging machinery and produces gears and' flexible bearings for general sale to the engineering industry. Other fields of enterprise for which the group designs, manufactures and sells machinery and plantare mechanical handling, refrigeration and the foundry,'. paint, ink, rubber, marine and aircraft industries.. Almost a third of the production of the United King dom factories is exported and with the output of the group's factories in the U.S.A. and other overseas countries more than half the group's sales are to customers outside the I Jnited KinnHnm Notice of meeting The sixty-seventh annual general meeting of Baker Perkins Holdings Limited will be held in the Queen's Room, Baltic Exchange Chambers, 14-20 St. Mary Axe, London, E.C.3 on 28th June 1968 at 12.15 p.m. for the following purposes -- Ordinary business 1. To receive and consider the company's accounts and the reports of the directors and auditors for the year ended 31st December 1967. 2. To declare a dividend. 3. To. elect directors. 4. To transact any other business of an annual general meeting. Special business 5. To consider, and, if thought fit, pass the following resolution, which will be proposed as a special resolution-- That article 137 of the articles of association be deleted and the following new article 137 be inserted in lieu thereof-- "137. The directors shall provide for the safe custody of the common seal and this seal shall never be used except by the authority of the di rectors or of a committee of the directors authorised by the directors in that behalf, and every' instrument to . which the common seal is affixed shall be autographicaliy countersigned by the secretary or by a second director or by someother person appointed by the directors for the purpose. In favour of any purchaser or person bona fide dealing with the company, such signatures shall be conclusive evidence of the .fact that the common seal has been properly affixed. Notwithstanding the foregoing provisions of this article any certificate for shares, stock or debenture or loan stock (except where the. trust deed constituting any debenture stock or loan stock provides to the contrary) or representing any other form of security of the company to which the common seal of the company is required to be affixed need not be signed by any persons." Only ordinary stockholders of the company are entitled . to attend and vote at the meeting. An ordinary stock holder is entitled to appoint one or more proxies to attend and vote instead of him. A proxy need not be a stockholder. All* I lOftQ By order of the board, J. S. HARDY, Cnc'frtf-snf Most of the large baking plants in America are equipped by Baker Perkins Inc., of Saginaw, Michigan. Here in Detroit, Koepplinger's Bakery produces a wide range of speciality breads and rolls on Baker Perkins plant. The oven may be seen in the foreground and the rack proofer in the centre background. The Rose Forgrove "Flowpak" 84 Super G, seen here in the company's Leeds demonstra tion room, is the first model in their wrapping machine range to be the subject of an in dustrial design programme. It has been developed from the existing and successful '`Flowpak" 84G model. Nearly 700 "Flowpak" machines have been sold all over the world and are used for wrapping a variety of goods including biscuits, chocolate and confection ery, textiles, meat and cheese. Stockholders' diary Ordinary stock interim dividend 1967 final dividend 1967 interim dividend 1968 7% cumulative preference stock 5f% debenture stock 1979/84 6|% debenture stock 1981/86 (see note 11 on the accounts) 6f% convertible unsecured loan stock 1982/85 (see note 11 on the accounts) Results for the year ended 31st December 1967 Annual report. 1967 67th annual general meeting Results for the six months ended 30th June 1968 Interim report 1968 Paid on 30th November 1967. Announced on 27th May 1968. If approved, payment to be made on 8th July 1968. To be announced on 27th September 1968. If declared, payment to be made on 6th November 1968. Dividend paid half-yearly on 31st March and 30th September. Interest paid half-yearly on 31st May and 30th November. Interest paid half-yearly on 31st March and 30th September. First conversion "date into ordinary stock 31st July 1968, Announced on 27th May 1968. Posted to stockholders on 4th June 1968. To be held in the Queen's.Room, Baltic Exchange Chambers, 14-20 St. Mary Axe, London, E.C.3 on 28th June 1968, at 12.15 p.m. To be announced on 27th September 1968. To be posted to stockholders on 27th September 19.68. Finance Act 1965 The market value of Baker Perkins Holdings Limited stocks on 6th April 1965 for the purpose of the long term . capital gains tax were -- 5f% debenture stock (100) 6% debenture stock (100) Preference stock (1) Ordinary stock (1) 91 0 95 10 ' . 18 1 19 0 0 6 0 The 6f% convertible unsecured loan stock was issued at par on. 15th June 1965. s'" - ' TKa XU X J. ..A -- x. XI, Baker Perkins Holdings Limited Board of directors Chairman A. 1. Baker, c.b.e., j.p., m.a,, c.Eng.,F.i.Mech.E., F.i.Prod.E Vice chairmen J. F. M. Braithwaiie, m.a. Executive vice chairman - Overseas. R. H. Wilkins, o.b.e., f.c.i.s. Executive vice chairman - United Kingdom. Directors K. C. P,.Barrington, f.c.a. Non-executive director. A managing director of Morgan Grenfell & Co. Ltd. W. A. B. Brown, M.A., C.Eng., F.I.Mech.E. Chairman and managing director, Rose Forgrove Ltd. H. Crowther, C.B.E., J.P., C.Eng., M.I.Mech.E. Non-executive director. S. C. Hargreaves, m.a,, c.Eng., M.I.Mech.E. Director, Baker Perkins Ltd. P. B. Harley, B.com. <u.s.a.). President, Baker Perkins Inc. N. Mountain., Chairman and managing director, Baker Perkins Ltd. . J. M. Peake, M.A., C.Eng., M.I.Mech.E., F.I.M.A. Group planning director. W. S. B. Sampson, f.c.a., f.c.i.s. Finance director., L. P. Simpson, B.Sc. (Tech.)., C.Eng., F.i.Prod.E Deputy managing director, Baker Perkins Ltd. Secretary J. S. Hardy, m.a., f.c.i.s. Auditors Price Waterhouse & Co. Bankers Lloyds Bank Ltd. Morgan Grenfell & Co. Ltd. Solicitors Clifford-Turner & Co. Head office and registered transfer office Westwood Works, Peterborough > London office 13 Stanhope Gate. Park Lane. London W.l. Chairman's letter to the stockholders Certain factors in the economic climate in 1967, such as the slowing up in Germany, the effect of which spread generally into Europe and depressed exports from this country, resulted in the year turning out to be less satis factory than we had hoped. In the United Kingdom there was the monetary crisis, resulting in November in the devaluation of sterling. However, against this back ground I can report an improvement, compared with 1966, in profit after taxation attributable to the stock holders of Baker Perkins'; of approximately 109,000. This figure must be viewed in the light of the effect of devaluation and the change in accounting procedure explained in the Directors' Report as well as the higher rate of corporation tax. The most pleasing aspect of the year's profit is that the return before taxation on capital employed for the United Kingdom group improved as shown on the following page but it still falls short of what I would consider satisfactory in the longer term and what we are planning to achieve. We devoted much time and effort during 1967 to reappraising our method of managing the group, with the help of Urwick, Orr & Partners Ltd., management consultants. As a result we decided to make a funda mental change from the board of management type of organisation, which had served us well for almost fifty years, to a system of straight line authority and respon sibility. This change was announced in the press on 18th October 1967. I am now concentrating mainly on the areas of long range planning and future policy. I also have responsibility for personnel policy throughout the group and for ensuring that an adequate supply of properly trained manpower:is available for our future needs at all levels. We have also devoted considerable effort to improving our management techniques by the introduction of formal long range planning and manage ment by objectives. Both these are my responsibility, and the group planning director, J. M. Peake, reports directly to me. The day-to-daycontrol of the group is the responsibility of two executive vice chairmen, J. F. M. Braithwaite for the overseas companies and Baker Perkins (Exports) Limited, and R. H. Wilkins for the United Kingdom companies. W. S. B. Sampson, as finance director, also has responsibility for group services. Although we have had less than six months' experience of the new organisation, 1 think it is working well and has promise for the future. On 1st January 1968 important changes took place in the. top management of our United States company, Baker Perkins Inc. of Saginaw, Michigan. As E. Archer Turner,for the last eleven years executive vice president and general manager, was due to retire in April 1968, he relinquished the position of general manager at the end of 1967, to facilitate the transfer of his; heavy respon sibilities. Marwood A. Weber, formerly vice president and general manager. I am deeply grateful to Mr. Turner for the outstanding contribution that he has made to the management of the company, which has been a major factor in the success which it has achieved in recent years. I am pleased that he has consented to continue as a director and consultant. I warmly endorse all that the directors have said about our relatipns with employees and I would add my thanks on your behalf to my colleagues for their loyal support in a difficult year. I regret that the directors' intentions to make a scrip issue and thereby increase the amount of the total dividend were frustrated by government action. Since the dividend rate was last increased in 1960, profits retained in the business have increased by approxi mately 2,500,000. In regard to the final dividend we have done as much as was permitted with Treasury consent. I am sorry that the annual report is published later than usual this year, due solely to the quinquennial tax audit of the European limited partnership which is additional to that firm's annual audit. Next year we should be able to revert to publishing the annual report in the early part of May. Looking at 1968, we have gained some advantages from devaluation, which is helping the export sales of wrapping and other unit machines, but the budget was aimed at reducing home consumption in a number of trades which we serve, and in some order-taking is slow. It is a continuing cause for serious concern that no attempt was made to ease the heavy burden of direct taxation which has such a deadening effect on initiative at all levels in industry and that no other direct incentives were introduced. It is deplorable that government expenditure continues to rise and the numbers of civil servants to increase. The international monetary system is still unsettled and the United States, is now struggling with a balance of payments problem with which we are so familiar, requiring cut-backs in expendi ture at home and abroad. Since I first drafted this letter the disturbances in France and the reimposition of credit restrictions in the United Kingdom have done nothing to improve the general climate for business, and forecasting against such a back-ground is difficult. I am confident that the group is gaining strength from year to year and Baker Perkins from the nature of its business as a major supplier of goods to many industries must always take a longer view of economic conditions. However, in the short term, unless the situation deteriorates further, I- expect the profit for 1968 should be much the same as last year. . . _____ _ .... i ^ i ^ < i iyo - til l 1 M l tel Group financial highlights Sales to customers United Kingdom -- Home -- Export Overseas manufacture 1967 12,950,886 6,247,070 11,196,998 30,394,954 % 42-6 20-5 36-9 100-0 1966 12,264,570 6,230,696 10,181,891 28,677,157 V/o 42-8 21-7 35-5 100-0 Capital employed (Capital, reserves and minority interests in subsidiaries) United Kingdom companies Overseas companies 6,731,486 8,121,300 14,852,786 45-3 54-7 100-0 6,519,510 48-4 6,947,623 51-6 13,467,133 . 100-0 Profit before taxation United Kingdom companies Overseas companies. % on capital employed 728,917 10-8 1,223,764 1,952,681 15-1 13-1 % on capital employed 223,850 3-4 1,512,538 1,736,388 21-8 12-9 Profit after taxation attributable to stockholders of Baker Perkins Holdings Limited Earnings after tax per 1 unit of ordinary stock Dividends payable to ordinary stockholders -- per 1 unit -- gross total Cash flow (retained profits plus depreciation) Capital expenditure on property, plant and machinery 857,978 4/0d * 2/3-9d .476,859 1,018,648 1,005,489 749,320 3/7d . 2/3d 461,476 .. . ' 945,137 1,208,094. directors' report The directors have pleasure in presenting their sixtyseventh annual report together with the audited accounts of the company for the year ended 31st December 1967. Although the requirements of the new Companies Act 1967 relating to matters to be contained in the report and accounts do not apply in respect of the year under review, the directors have taken this opportunity to include in the accounts and in an appendix attached to this report information which will be required in future years. ' Results In 1967 the overseas profit before taxation was converted at the appropriate rates of exchange ruling before and after devaluation. The effect of adjusting the trading balances as at the date of devaluation on 18th November 1967, has been to increase group profit before taxation by 57,000 and after taxation by 31,000. Had the post devaluation rates been applied for the whole year, the profit before taxation would have been increased by a further 132,000 and after taxation by 68,000, but the directors wish to adopt the conservative basis which has been approved by our auditors, as explained in note 1 on the accounts. Sales to customers in 1967 totalled 30,394,954 com pared with 28,677,157 -in 1966. Profit before taxation increased to 1,952,681 in 1967 from 1,736,388 in 1966. The profit after taxation attributable to the stockholders of Baker Perkins Holdings Ltd. amounted to 857,978 in 1967 compared with 749,320 in 1966. As explained in the interim report for 1967 and in note 7 on the accounts, the basis of accounting with regard to drawing office costs in the United Kingdom was standardised as from 1st January 1967. This change resulted in an increase in profit after taxation of some 4.0,000 for the first half and 120,000 for the year. The profit after taxation was also affected by additional provisions required following a detailed assessment of the stock obsolescence position and by the increase in the rate of United Kingdom corporation tax. The group financial highlights on page six show that the return on capital employed throughout the group is 13-1% compared with 12-9% in-1966. There has been a welcome increase in the return from the United King dom companies, although the result is still not satis factory. This has coincided with a smaller return on capital employed by the overseas companies. However, the sterling equivalent of the capital employed overseas at 31st December 1967 is approximately 8,120,000, or an increase of about 1,170,000 over the preceding year, mainly arising from the effects of devaluation already mentioned. The conversion of overseas assets and liabilities at the post-devaluation rates of exchange ruling at 31st December 1967, had the effect of increas ing group reserves by 732,227. This has affected the return on capital employed by the overseas companies shown in the group financial highlights and had the post-devaluation rates applied for the whole of the year, the return on capital employed by the overseas com panies would have been 16-7% instead of 15-1%. It must be borne in mind that the major part of the group's diversification and research and development takes place in the United Kingdom. This necessarily bears more heavily on the results of the United Kingdom subsidiaries with subsequent benefit overseas, where, with the exception of the U.S.A. company and, to a lesser extent, the Australian company, the subsidiaries abroad do not undertake the same degree of research and development. The geographical tabulation of sales given in the 1966 report was welcomed by stockholders and a similar table is provided in the appendix to this report. United Kingdom operations The results of the United Kingdom companies as a whole showed a considerable improvement from 223,850 to 728,917, which was all the more encourag ing as it was achieved against a background of demand that was far from buoyant in some of the markets which we serve. Baker Perkins Ltd. benefited from greater activity in the food processing industry, in particular the bread and flour confectionery trade. Machinery and ovens for this and the biscuit industry continue to be the most impor tant part of this subsidiary's business to the develop ment of which considerable effort is always devoted. The large sums spent on the development of web offset magazine and newspaper printing presses are resulting in important orders and many enquiries. James Halley & Sons Ltd., also in the printing machin ery industry, but chiefly in rotogravure presses for packaging materials, occupied its enlarged factory premises and, with new designs under way, should be well placed to take advantage of the, opportunities in its particular field. Its results in 1967 were affected by heavy development costs and the factory move. Rose Forgrove Ltd., which contributed to .the group's sales almost 6,000,000 in wrapping and packaging machinery, flexible bearings, gear boxes and specialised equipment for the marine and aircraft industries, made a good contribution to the profits.of the United Kingdom nrniin The oror+mn /vf -----*"* directors- report continued Leeds, mentioned in last year's report, is proceeding to plan. The affairs of the Granbuil division of Steele & Cowlishaw Ltd. were wound up by disposing of its business and remaining useable inventory to a company outside the group. This venture into plastic bottle blowing and filling equipment was Unsuccessful and has involved the group in sizeable losses which have now been stopped. Steele & Cowlishaw Ltd., relieved of this burden, should now improve its contribution to profits. The group's interest in the industrial laundry-machin ery market was maintained most successfully by Baker Perkins Jaxons Ltd., which once again achieved a very satisfactory profit. The reorganisation at Douglas-Rownson Ltd. and attention by the management to costs and improvement or elimination of less profitable lines have already borne fruit in 1967, and with an order book in a much healthier state for 1968 its prospects have improved considerably. Baker Perkins Developments Ltd. continues to provide service to group companies and is actively exploring other possibilities of offering its accumulated know ledge of high speed mechanical handling more directly to customers of group companies. After an association dating back over thirty-five years the group disposed in January 1968 of its 28-5% share holding in Graham-Enock Manufacturing Co. Ltd. resulting in a profit on sale amounting to 19,745 which should be free of tax. Overseas operations Machines and services supplied from the United King dom to overseas countries totalled 6,247,000 which was only a small increase on the previous year. After raising exports steadily year by year, it is disappointing to record this levelling off, but, after devaluation of the pound sterling and with an upswing of orders in the German and other European markets, it is hoped to expand exports again in future years. The beneficial effects of devaluation have already been felt in the case of wrapping and packaging machines and similar units but, in the case of food machinery, the additional orders may come too late in the year to improve export ship ments in 1968. Baker Perkins Inc., U.S.A., sales to customers for 1967 totalled US.$.23,669,328, but, in common with most of the nation's heavy machinery industry, continuing cost increases exerted great pressure on profits, which amounted to US. $.1,273,156 after taxation for the.year, a decline of 19% from the previous year. One of the highlights of 1967 was the huge bakery .machinery exhibition at Atlantic City, New Jersey. It was evident from the attention of the leadina bakina companies throughout the world that there is growing interest in the advanced technology Baker Perkins now offers the industry. A timely acquisition in 1967 was the purchase of the Podbielniak centrifugal contactor business from Dresser Industries Inc. of Dallas, Texas. This worldrenowned machinery used in liquid-liquid extractions and separations complements the solid-liquid centri fugal equipment of the chemical division, and is ideally suited for manufacture at the Saginaw plant. In North America the management does not now foresee a better profit level in 1968 compared with 1967 unless there is a significant improvement soon in capital goods purchasing, especially in the segment of the chemical industry served by Baker Perkins Inc. The minority interest of 33% in Canadian Baker Perkins Ltd., formerly held by Union Steel Products Co.,was purchased during the year so that the Canadian subsidiary is now wholly owned by Baker Perkins Inc. The share capital of Baker Perkins Pty. Ltd., Australia was increased in June 1967 from Aus.$100,628 to Aus.$1,000,000 by a scrip issue thus providing a sound base for the group's future expansion in Australasia. A cash dividend of Aus.$100,628 was also paid. For the first time the group's share of the net assets in Gordon Brothers Pty. Ltd. is shown on page 20 of this report at a figure of 220,000 which compares with the cost of 77,455. This represents the group's stake of 40% in a manufacturing company in Australia which has now been established for over fifty years. During the year under review the group acquired for 94,185 a 45% interest in a new partnership in Germany, Rudolf Lensing K.G., together with world wide sales rights for that company's machinery for the thermo plastic forming of packages. These machines are being sold as a complementary line to the Rose Forgrove wrapping and packaging machines. Also during the year, a small sales subsidiary named Baker Perkins Servigos Tecnicos Industriais Limitada . was formed in Rio de Janeiro, Brazil and a branch office of Baker Perkins (Exports) Ltd. was opened in Copen hagen, Denmark to promote the sale of group products in those countries. Capital expenditure Expenditure during the year on improving or replacing, assets, after deducting investment grants, amounted to 1,006,000. This includes the rebuilding and occupation of the Rose division machine shop at the Gainsborough factory of Rose Forgrove Ltd. The group continues to keep its productive facilities up to date and an increasing number of tape controlled machine tools is beina acauired to increase nroduotion Directors' report continued and to guarantee the fine precision required on many of 6f% on the ordinary stock, which, together vvith the the group's products. interim dividend of 5% paid on 30th November 1967, makes a total gross distribution for the year of Ilf % Finance As will be seen from the group financial highlights, the cash flow for 1967 of 1)018,648 covered the capital expenditure on property, plant and machinery during the year. This is encouraging in view of corporation tax on profits and income tax on dividends which in the case of Baker Perkins makes a total tax burden of 58-5% for the group. The company's needs during 1967 have been met by its bankers without the need to raise any new capital. The sum of 21,391,755 was required to finance group stocks and debtors at 31st December 1967 and although stock and work in progress was about the same as the (2s. 3-9d.) as compared with 11% (2s. 3d.) paid for 1966. This is just under the maximum allowed by the Chan cellor's restriction on dividend increases of not more than 3{% per annum as compared with the previous year. The board will keep this matter under review, and take further action as soon as this is possible in the light of conditions at that time. The total gross amount payable in respect of pre ference and ordinary dividends amounts to 506,259 (1966 -- 490,876) of which 297,427 is payable to stock holders and 208,832 to the Inland Revenue. The amount of 351,719 (1966--261,476) is added to revenue reserves. previous year, debtors increased by 1,367,438 about half of which figure is accounted for by the change in rates of exchange following devaluation. Debtors for United Kingdom exports accounted for approximately 3,500,000 at the year end, from which was deducted `without recourse' financing of .around 1,000,000 leaving 2,500,000 of extended term sales and other Board of directors The members of the board are listed on page 4 and there have been no changes during the year. The directors retiring by rotation are K. C. P. Barrington, J. F. M. Braithwaite, S. C. Hargreaves and J. M. Peake and being eligible they offer themselves for re-election. exports, which are mostly covered by credit insurance and financed by means of bank advances. The credit `squeeze' has not affected the funds available to finance export trade and special government schemes are established for this purpose. The holders of the 6|% convertible unsecured loan stock 1982/85 of 2,050,000 have the option to convert into 1 ordinary stock units on 31st July 1968 at the rate of 44 ordinary stock units for each 100 of loan stock (45/5d. per ordinary stock unit) as explained in note 11 on the accounts. Stock certificates At the annual general meeting, stockholders will be asked to approve an alteration to the articles of associa tion of the company providing that share and stock certificates given under the company's seal need not be signed. A resolution to this effect is contained in the notice of the annual general meeting on page 1. If this resolution is passed it will enable the company to deal more efficiently with the issue of stock certificates without in any way weakening the control exercised over their issue. Dividends in view of the 1967 results and as an expression of con fidence in the long-term future of the group the directors had intended recommending a scrip issue. There has been no increase in the ordinary dividend for a number Auditors Price Waterhouse & Co. have signified their consent to continue in office as auditors. of years, during which time the assets attributable to the ordinary stockholders' interests have been materially increased by retention of profits. In view of this, and the present cover for the dividend of 1*7, the board would have expected to recommend retaining the present ordinary dividend rate on the capital as increased by the scrip issue. . The directors regret that this intention has been frus Personnel Employee relationships have been extremely good throughout the world and the directors wish to pay tribute to the willing response of all. employees to the many and continued demands made upon them in the service of the group. , trated and cannot now be implemented as a result of the Government's request forthe limitation of dividends and the avoidance of scrip issues at this time. TI___ ________________________________________ _l ... |* * ' By order of the board, J. S. HARDY, Appendix to directors' report / Geographical analysis of sales United Kingdom North America Europe excluding United Kingdom Australasia Rest of world Total 1967 000 % 12,951 9,396 3,318 1,904 2,826 42-6 30-9 10-9 6-3 9-3 30,395 100-0 1966 000 0/o/ 12,265 9,433 2,825 1,738 2,416 42-.8 32-9 9-9 6-0 8-4 28,677 1000 Valuation of land and buildings The directors have arranged for a professional valuation of the group's properties to be carried out during 1968. Although it is not proposed to write up the book value of the group's land and buildings in the accounts, the results of the valuation will be disclosed in subsequent annual reports. From a small sample of the properties already valued it would appear that the total market value of the land and buildings is substantially in excess of the amount at which they are included in the balance sheet. Political and' charitable contributions No money has been contributed for political purposes in the United Kingdom by the group during the year or previously. Total contributions by the group to charitable organisations in the United Kingdom during the year amounted to 4,872. Employees The average number of employees in the United Kingdom during the year was 7,890, and their total remuneration for the year amounted to 7,523,289. Contracts in which directors had material interests None of the directors had a beneficial interest in any contract to which the parent company or a subsidiary was a party during the current year. Appendix to directors1 report continued Directors' interests in stocks, debentures and loan stocks The following were directors of the company on 31st December 1967; holdings of stocks or debentures in the company and its subsidiaries in which they or their families had an interest at that date are set out below-- Baker Perkins Holdings Limited (a) Beneficially held A. 1. Baker K. C. P. Barrington J. F. M. Braithwaite W. A. B. Brown H. Crowther S. C. Hargreaves P. B. Harley N. Mountain J. M. Peake W. S. B. Sampson L. P. Simpson R. H. Wilkins (b) Not beneficially held A. I. Baker K. C. P. Barrington J. F. M. Braithwaite S. C. Hargreaves (as atrustee of the Baker Perkins group pension scheme) Ordinary stock 20,880 500 7,750 450 1,923 119 100 1,069 100 602 196 2,287 137,062 19,775 6,000 7% Cumulative preference stock 5J% Debenture stock 1979/84 6% Convertible unsecured loan stock 1982/85 50 459 150 1,200 981 5,000 .1,000 112 . Baker Perkins Inc. Beneficially held P. B. Harley Common stock $5 units 11,862 Business of .the company See inside front cover "About Baker Perkins Holdings Limited". baker Perkins Holdings Limited____ :____ Group profit and loss account for the year ended 31st December 1967 Sales to customers (note 14) Income from associated companies (note 2) Costs and expenses (note 3) Bank and loan interest payable (note 5) Profit before taxation Taxation (note 6) Profit after taxation (note 7) 1967 30,394,954 355,954 30,750,908 . 28,227,005 2,523,903 571,222 1,952,681 933,156 1,019,525 1966 28,677,157 413,158 29,090,315 26,796,825 2,293,490 557,102 1,736,388 785,430 950,958 Attributable to stockholders of Baker Perkins' Holdings Limited Dividends, gross -- Preference stock Ordinary stock Income tax deducted and retained Retained in the business-- Baker Perkins Holdings Limited Subsidiaries 29,400 476,859 " 506,259 -- 372,225 . (20,506) 506,259 351,719 . 857,978 29,400 461,476 490,876 3,032 . .. 103,355 158,121 487,844 261,476 749,320 Attributable to minority stockholders of subsidiaries 161,547 1,019,525 201,638 950,958 Baker Perkins Holdings Limited Group balance sheet 31st December 1967 Fixed assets Land, buildings, plant and machinery (note 8) Investments in associated companies (note 2) 1967 7,184,821 1,246,880 8,431,701 1966 6,650,333 1,004,251 7,654,584 . Net current assets (note 9) Stock and work in progress Debtors Bank balances and cash Less-- Bank advances Creditors Customers' deposits Taxation Ordinary dividend, gross 9,204,431 12,187,324 930,827 22,322,582 3,412,717 5,105,518 1,366,855 402,141 271,759 10,558,990 11,763,592 20,195,293 9,107,016 10,819,886 888,092 20,814,994 3,470,209 4,338,069 1,364,995 207,871 256,376 9,637,520 11,177,474 18,832,058 Financed as follows: Capital and reserves Issued ordinary capital Reserves-(note 10) Ordinary stockholders' interest Issued preference capital Minority interests in subsidiaries Taxation deferred by capital allowances Loans (note 11) 4,102,009 8,264,592 12,366,601 420,000 12,786,601 4,102,009 7,199,382 11.301.391 .420,000 11.721.391 2,066,185 1,745,742 563,112 4,779,395 ' rnn 4 ok ono 517,600 4,847,325 rf o ooo aco baKer KerKins Ho 1 dings L!mited Company balance sheet 31st December 1967 Fixed assets Land, buildings, plant and machinery (note 8) Investments iri associated companies (note 2) Subsidiaries Shares at cost Amounts receivable Amounts payable Current assets Debtors Taxation recoverable Current liabilities Bank advances Creditors Taxation Ordinary dividend, gross Financed as follows: Capital and reserves Authorised in shares of 1 each Capital: 7% cumulative preference 420,000 Ordinary 6,000,000 6,420,000 Reserves (note 10) Taxation deferred by capital allowances . 1967 2,054,028 882,088 2,936,116 1966 ' 1,798,231 771,740 2,569,971 8,428,421 5,200,304 13,628,725 . 521,156 13,107,569 8,027,261 5,516,979 13,544,240 631,053 12,913,187 168,969 '-- { 1,478,826 616,123 37,000 271,759 Issued and converted into stock 420,000 4,102,009 168,969 16,212,654 2,403,708 13,808,946 52,473 2,228 1,373,355 469,681 -- 256,376 4,522,009 4,413,542 8,935,551 94,000 54,701 15,537,859 2,099,412 13,438,447 ` 4,522,009 3,982,113 8,504,122. ` 87,000 Loans (note 11) A:l BAKER.n,ra,,(,,,, ; 4,779,395 13,808,946 4,847,325 13.438.447 Notes on the accounts 1. Rates of exchange and devaluation Operations of subsidiaries and branches outside the United Kingdom have been included in the group profit and loss account on the basis of the applicable rates of exchange ruling before and after devaluation on 18th November 1967. All overseas assets and liabilities at 31st December 1967 have been expressed in sterling at the exchange rates ruling at that date. The effect of adjusting trading balances as at the date of devaluation has been to increase group profit before taxation by 57,000 and after taxation by 31,000. The conversion of other overseas assets and liabilities at post devaluation rates of exchange had the effect of increasing group reserves by 732,227 (see note 10). 2. Associated companies (a) Income European limited partnership -- Profit for year before taxation attributable to the company's interest Other companies -- Dividends received -- quoted -- unquoted 1967 334,307 7,142 14,505 355,954 1966 392,397 6,949 13,812 413,158 (b) Investments European limited partnership -- Investment at cost Net unremitted profit from 1st January 1962 The capital and unremitted profit attributable to this investment at 31st December 1967 amounted to approximately 1,608,000 (1,270,000). Prior to 1st January 1962, income was taken into profit only to the extent of remit tances received. Other companies -- Shares at cost --quoted overseas (market value 206,000 (150,000)) -- unquoted.(see below) The group's share of the profits earned by investments in unquoted com panies as disclosed by the latest available accounts amounted to 34,000 before taxation and 24,000 after taxation, and the share of the undistributed profits less losses accumulated since the investments were acquired amounted to approximately 64,000. These figures do not include the company's unquoted investments which were sold in January 1968 at a profit of 19,745. Company 1967 1966 205,215 649,345 854,560 205,215 538,997 744,212 27,528 882,088 27,528 771,740 Group 1967 1966 205,215 649,345 854,560 205,215 538,997 744,212 141,915 250,405 1,246,880 121,640 138,399 1,004,251 3. Costs and expenses Costs and expenses include -- Depreciation (note 8) Directors' emoluments: Fees Management services . Pensions to past directors or their dependants Compensation for loss of office as director Audit fees and expenses 1967 . . 616,846 3,000 163,838 6,483 -- 26,752 . 1966 578,988 3,625 .160,043 5,9215,890 22,272 Notes on the accounts continued 4. Directors' emoluments Emoluments received by A. I. Baker as chairman (net after tax, approximately 6,800 (6,500)) Other directors' emoluments: 1 to 2,500 per annum 5,001 to 7,500 ,, ,, 7,501 to 10,000 - ,, ,, . 10,001 to 12,500 ,, vK:jfii;--.- '--fi' 12,501 to 15,000 ,, 35,001 to 37,500 ,, 40,001 to 42,500 ,, }P. 'B. Harley for services as president of Baker Perkins Inc., U.S.A. Bank and loan interest payable Debenture stocks Convertible unsecured loan stock Bank and other loans repayable within 5 years 1967 14,552 1966 12,995 12 22 34 1 34 1 -1 1967 170,418 138,375 262,429 571,222 1966 178,249 138,375 240,478 557,102 6. Taxation United Kingdom (1966 after relief of 38,000 for investment allowances) Corporation tax Income tax Double taxation relief Overseas (including 145,275 (177,484) on unremitted profit of European limited partnership) Deferred by capital allowances 1967 497,175 -- (217,316) 633,788 5,195 918,842 1966 , 242,796 (9,357) (168,688) 750,751 8,008 823,510 Adjustments in respect of previous years (including in 1967 an increase'of 26,150 in taxation deferred by capital allowances arising from the change in the rate of corporation tax) 14,314 (38,080) 933,156 785,430 United Kingdom and overseas tax has been based on the profit for the year. United Kingdom corporation tax has been calculated at the rate of 40% up to 31st March 1967 and 42% thereafter. 7. Profit after taxation In the past it has been the group practice in the United Kingdom to bring drawing office costs into work in progress on certain large - contracts only. This accounting practice has been adopted for all contracts as from 1st January 1967 and approximately 120,000 of the profit after taxation arises from this change. . Notes on,the accounts continued e 8. Land, buildings, plant and machinery (a) Group Land and buildings: Freehold properties: Cost Depreciation Net Leasehold properties: Longterm: Cost Depreciation Net Shortterm: Cost Depreciation Net Plant and Machinery: Cost Depreciation Net Patents, patterns and tools at cost, less amounts written off Total At 31st Devaluation December adjustment' 1966 (note 1) 000 000 3,513 1,115 189 96 2,398 93 228 44 184 50 9 41 8,677 4,955 3,722 1 1 446 307 139 305 6,650 233 Capital expenditure 000 278 278 18 18 710 710 1,006 Sales, disposals and adjustments 000 38 8 30 Depreciation for year 000 73 73 At 31 st December 1967 000 3,942 1,276 .2,666 4 224 1 5 48 3 5 176 69 5 14 5 55 259 9,574 198 534 . 5,598 . 61 534 3,976 312 94 617 7,185 (b) Company Land and buildings: Freehold properties: Cost Depreciation Net Leasehold properties: Long term: Cost Depreciation Net Plant and machinery: Cost Depreciation Net Total 2,115 541 1,574 228 44 184 67 27 40 . 1,798 332 31 2,416 4 . 46 583 332 27 46 . 1,833 4 224 1 4 47 3 4 177 10 1 76 1 6 32 10 -- 6 44 342 30 56 2,054 Contracts in respect of future capital expenditure which had been placed at the balance sheet date are estimated at 317,000 (311,000) for the group and at 1,000 (14,000) for the company. Capital expenditure which had been authorised but not contracted for at the balance sheet date was approximately 98,000 for the. group and 5,000 for the company. '. Investment grants amounting to 80,000 (69,000) have been deducted in arriving at the capital expenditure of the group on plant and machinery during the year. notes on tne accounts continued 9. Net current assets of the group Stock and work in progress is stated in the accounts at the lower of cost.(including factory overhead expenditure) and net realisable value. Debtors include the sum of 724,583 (641,946) not due within one year (mainly overseas). Bank advances include secured advances to overseas subsidiaries of 776,185 (402,831). Taxation includes United Kingdom corporation tax of 303,950 (89,724) payable 1st January 1969. ' 10. Reserves Balances -- 31st December 1966' Devaluation adjustment (note 1) Retained profit 1967 Dividends from subsidiaries out of prior years' profits Transfer of net unremitted profit for 1967 attributable to minority invest ment in European limited partnership Revenue reserves of subsidiary capitalised in 1967 Other adjustments arising on consolidation Balances -- 31st December 1967 Group Capital Revenue 1,970,130 397,038 5,229,252 335,189 351,719 110,348 359,749 (13,550) 2,823,715 (110i348) (359,749) (5,186) 5,440,877 Capital reserves include 825,551 (825,551) in respect of share premium account. Company Capital Revenue 1,364,548 2,617,565 372,225 59,204 110,348 (110,348) 1,474,896 2,938,646 / 11. Loans 5f% Debenture stock 1979/84 6$% Debenture stock 1981/86 6f-% Convertible unsecured loan stock 1982/85 1967 1,332,125 1,397,270 2,050,000 4,779,395 1966 1,358,375 1,438,950 2,050,000 4,847,325 The debenture stocks are secured by a first floating charge on the assets of the company. The company is required to apply the sum of 30,000 annually in redemption of its 5f per cent debenture stock 1979/84 at par by drawings or by purchase in the open market at a price not exceeding 105, together with a further sum of 30,000 in respect of its 6 per cent debenture stock 1981/86 on the same terms. The 2,050,000 6f per cent convertible unsecured loan stock 1982/85 may, at the option of the stockholders, be converted into 1 ordinary stock units of the company on 31st July in each of the years 1968 to 1971 inclusive; the number of ordinary 1 stock units issued for each' 100 of the stock converted will be 44 (45/5d. per unit) in 1968, 42 (47/7d. per unit) in 1969, 40 (50/- per unit) in 1970 and 38 (52/8d. per unit) in 1971. The company may redeem the whole or any part of the issue, on or after 31st March 1982, by drawings at par and, at any time, may purchase any of the stock in the open market or by private treaty at a price not exceeding 105. 12. Contingent liabilities There were contingent liabilities in subsidiaries of 270,605 (352,698) in respect of trade bills discounted and of 52,083 in respect of a guarantee given by a subsidiary of the bank overdraft of an associated company. The company had guaranteed bank overdrafts of subsidiaries amounting to 560,450 (646,517). Notes on the accounts continued 13. Stock options by a subsidiary During 1967 Baker Perkins Inc. has granted options to certain of its senior executives to subscribe for 9,000 of its common shares at $15.50 per share, being the market value of the shares at the option dates. 14. Sales to customers This represents the total amount charged by the group for the sale of goods arid services to external customers. 15. Subsidiaries and associates Particulars of operating subsidiaries and associates as required by the Companies Act 1967 are given on page 20. Report of the auditors to the members of Baker Perkins Holdings Limited In our opinion the accounts set out on pages 12 to 20 give, so far as concerns members of the company, a true and fair view of the state of affairs at 31st December 1967 and of the profit for the year ended on that date of the company and of the group and comply with the Companies Acts 1948 and 1967. The accounts of the European Limited partnership referred to in note 2 have been audited by a European firm. London 27th May 1968. PRICE WATERHOUSE & CO. Chartered Accountants. Baker Perkins Holdings Limited--------- ------ ----------:----- Subsidiaries, branches and associates (Ordinary capital wholly owned unless otherwise stated) SUBSIDIARIES --INCORPORATED IN UNITED KINGDOM THE ALLIANCE FOUNDRY CO. LTD., Luton BAKER PERKINS LTD., Peterborough and Hebburn-on-Tyne BAKER PERKINS DEVELOPMENTS LTD., Twyford, Berks. BAKER PERKINS (EXPORTS) LTD., London BAKER PERKINS JAXONS LTD., Glasgow (registered in Scotland) DOUGLAS-ROWNSON LTD., Basingstoke FORMMASTER LTD., London (80%) JAMES HALLEY & SONS LTD., West Bromwich ROSE FORGROVE LTD., Leeds, Gainsborough, Gateshead, Saxilby and Skegness STEELE & COWLISHAW LTD., Hanley, Stoke-on-Trent Funds employed 000 Business activities and products 86 Castings 5,151 Food, printing, chemical and foundry machinery 97 Development engineers \ 743 Machinery exporters '375 Laundry machinery 797 Food processing, mechanical handling and refrigeration plant 96 Business forms printing machinery 194 4,700 Printing machinery Wrapping and packaging machinery, flexible bearings, gears 389 Paint, ink and chemical machinery SUBSIDIARIES -- INCORPORATED OVERSEAS Australia BAKER PERKINS PTY. LTD., Melbourne Brazjl BAKER PERKINS SERVIpOS TECN1COS INDUS TRIAL LTDA., Rio de Janeiro Canada CANADIAN BAKER PERKINS LTD., Brampton, Ontario (67%) Germany FORGROVE G.m.b.H., Cologne New Zealand BAKER PERKINS (N.Z.) LTD., Auckland South Africa BAKER PERKINS SOUTH AFRICA (PTY.) LTD., Johannesburg Switzerland BAKER PERKINS A.G., Zug . BAKER PERKINS FAR EAST A.G., Zug U.S.A. BAKER PERKINS INC., Saginaw, Michigan (67%) 811 Import and manufacture of group products -- Import of group products 431 . Food, chemical and laundry machinery 372 Import of packaging, confectionery, printing and laundry machinery 196 Import and manufacture of group products 404 Import and manufacture of group products -)k 73 5,983 Investment companies Food and chemical machinery BRANCHES-- OVERSEAS Argentina Denmark France India Japan Sweden BAKER PERKINS (EXPORTS) LTD., Buenos Aires BAKER PERKINS (EXPORTS) LTD., Copenhagen BAKER PERKINS S.A., Paris BAKER PERKINS (EXPORTS) LTD., Bombay BAKER PERKINS FAR EAST A.G., Tokyo BAKER PERKINS (EXPORTS) LTD., Stockholm . 152 import of group products ASSOCIATED COMPANIES (See note 2 on the accounts) Europe RUDOLF LENSING K.G., Recklinghausen, West Germany (45%) LIMITED PARTNERSHIP (26% and 100% of preference capital) Australia GORDON BROTHERS PTY. LTD.,West Brunswick, Share of net assets 000 84 Thermoforming machinery- '1,608 Food and chemical machinery - 220 Food and refrigeration machinery Baker Perkins Holdings Limited How the group used its Income in 1967 We used our income for wages, salaries and employee benefits ' depreciation of fixed assets interest on borrowed money United Kingdom and foreign taxation on profits dividends to stockholders ' dividends to minority stockholders of subsidiaries investment in business assets materials, services and other expenses 000 12,982 617 571 933 506 111 402 14,629 30,751 % 42-2 2-0 1-9 3-0 1-6 0-4 1-3 47-6 100-0 The income came from sales to external customers and from our investments in associated companies makinn a total inhnmp rf 30,395 356 an 7m 98-8 1-2 inn.n eaKer perKins Hoidmgs Limited Ten-year statistical summary Operations Sales Depreciation Interest payable Profit before taxation Taxation Profit attributable to stockholders of Baker Perkins Holdings Ltd. 1958 000 14,300 379107 894 464 416 Net assets employed Fixed assets less depreciation Net-current assets, excluding bank advances Total net assets, excluding bank advances Financed by: Loans and bank advances Deferred taxation Minority interests in subsidiaries Preference stock Ordinary stockholders' equity Total funds employed. Rate of profit, before taxation and interest, on funds employed 3,770 7,089 10,859 1,610 . 274 1,522 420 7,033 10,859 9-2% Ordinary stockholders issued capital Net book value of 1 stock unit Gross dividend per 1 stock unit - 2,201 63/11 d 2/0d . Number of employees 6,280 1959 000 15,450 360 123 772 293 418 3,878 8,105 11,983 2,195 182 1,603 420 7,583 11,983 7-5% 2,357 64/4d 2/0d 6,430 1960 000 18,000 366 164 1,193 563 530 4,348 9,006 13,354 3,099 207 1,713 ' 420 7,915 13,354 10-2% 3,072 51/6d . (Scrip issue 1 for 4) 2/3d - 7,020 , 1961 000 23,700 474 359 . 1,294 598 686 5,652 12,504 18,156 5,870 482 1,642 . 420 9,742 18,156 9-1% 3,993 48/10d 2/3d . 9,850 1962 000 22,750 493 375 844 347 501 1963 000 22,945 487 380 816 500 226 1964 000 25,180 492 373 1,659 848 674 1965 000 28,168 550 503 2,106 881 1,027 1966 000 28,677 579 557 1,736 785 749 1967 000 30,395 617 571 1,953 933 858 6,100 13,051 19,151 6,775 561 1,635 420 9,760 19,151 6-4% . 6,126 12,535 18,661 6,392 501 1,691 420 9,657 18,661 64% : 6,412 13,751. 20,163 7,047 792 1,550 420 10,354 20,163 10-1% 7,059 14,485 21,544 7,655 , 14,648 . ' 22,303 7,927 510 1,632 420 11,055 21,544 . . 12-1% 8,318 518 . 1,746 420 11,301 \ 22,303 10-3% . 8,432 15,176 23,608 8,192 563 2,066 420 12,367 23,608 10-7% 4,019 48/7d 2/3d 9,920 4,027 47/1 Id 2/3d 9,080 4,092 50/7d 2/3d 9,200 4,102 53/11 d 2/3d 9,410 4,102. 55/2d . ' 2/3d ' 4,102 60/4d . 2/3-9d 9,190 . 9,140