In any expansion of industry or national prosperity .sx . THE ELECTRICAL INDUSTRY MUST BE IN THE FOREFRONT .sx Lord Chandos Chairman of Associated Electrical Industries .sx The Sixty-first Annual General Meeting of Associated Electrical Industries Limited was held on April 20 at Grosvenor House , Park Lane , London , W.1. The Rt .sx Hon .sx Viscount Chandos ( the Chairman ) presided and said :sx I have , first a sad and heavy task to perform .sx Two of our Directors , Lord Weeks and Mr. Comar Wilson , have died since the date of the last Annual General Meeting .sx Their colleagues on the Board have suffered the loss of two friends .sx Their experience and knowledge in the wide field of business will be greatly missed , and we record our deep gratitude for their services to the Board over a long period .sx Lord Head resigned from the Board on his appointment as High Commissioner in Nigeria .sx Our regrets at losing his services are , in a measure , offset by the knowledge that the post which he now fills is one of the most important in the Commonwealth .sx Top Management Strengthened .sx I want next to tell you of certain appointments consequent upon the reorganisation of the Company into a single trading entity .sx We have strengthened the top management at Head Office .sx Sir Cecil Dannatt was appointed Vice-Chairman in April last year , and I take this opportunity on your behalf of congratulating him upon the Knighthood which Her Majesty has conferred upon him .sx He took up his duties last May and his support and knowledge have already proved of the highest value .sx Later in the year , Mr. C. R. Wheeler was also appointed a Vice-Chairman .sx We would like publicly to thank Guest , Keen and Nettlefolds Ltd. for having agreed to his release .sx Mr. Wheeler will take up some executive duties next year .sx We have gained a notable accession of strength by his appointment .sx Sir Joseph Latham joined the Board in August , and since that date he has become Director of Finance .sx His wide experience of both finance and accountancy is proving of outstanding benefit to the Company .sx Mr. H. West , who has served the Company with distinction for 42 years , succeeded Dr. Dannatt as Group Managing Director at Manchester in April last , and was elected to the Board at the end of the year .sx Mr. R. I. Basset , who for many years has been a Director of AEI Woolwich , also joined the Board .sx You will be asked to confirm these appointments later .sx Mr. E. R. Mason has been appointed the sole Managing Director of AEI Export , and Mr. W. A. Ankerson Assistant Managing Director of the Woolwich Group .sx Mr. D. T. L. Rettie has been appointed the Managing Director of our subsidiary dealing with domestic appliances overseas- A.E.I. Gala .sx Retirements .sx I cannot refer to all those who retired last year , although they are much in our minds , but I would like to mention two by name .sx First , Mr. E. V. Small , who for a great many years has been concerned with our export business , and who has been notably ingenious and successful .sx There are a number of contracts still current which he negotiated , and we have retained him as a consultant upon these and more general matters .sx Secondly , Mr. F. Tankard , the Comptroller at Manchester , who has left us on reaching retiring age .sx We thank him for his past services , and wish him well for the future .sx To all who have retired , we wish happiness and long life .sx Research Leaders Honoured .sx Finally , we congratulate all those who have featured in the year's Honours lists , and particularly Dr. T. E. Allibone and Mr. L. J. Davies .sx The former is the head of our fundamental Research Laboratory at Aldermaston , and the latter the Head of Research at Rugby .sx 1960 TRADING PROFIT AFTER TAX VIRTUALLY UNCHANGED .sx I will deal with the figures very briefly .sx The trading profit , after tax , was virtually unchanged at +4,722,000 compared with +4,747,000 last year .sx Although the depreciation charged has risen by +378,000 , this was more than offset by a reduction in our tax liabilities .sx The adventitious profits , which will form part of our revenue as we change our investment , are considerably lower than last year .sx Together with amounts set aside for taxation now no longer required these profits are at just above +1m .sx compared with just under +2 1/2m .sx The total retention in the business , or , to use the American term , the cash flow , is for this reason slightly less than last year , at +7,843,000 compared with +8,127,000 .sx The increase of +10m .sx in working capital consisted partly of bigger stocks of finished goods but mainly of work in progress on large contracts .sx The financing of exports is a heavy burden and we welcome any help that H.M. Government can give us .sx At the end of the year the Group's bank overdrafts totalled over +9m .sx : however , +5 1/2m .sx related to the financing of the Berkeley contract and is largely self-liquidating .sx The Board have no proposals for the issue of additional capital .sx The payment of total Ordinary dividends of 3/- per share , will require about +140,000 more than last year because of the issue of additional Ordinary shares to A. Reyrolle and Co. Ltd. in exchange for our participation in C. A. Parsons and Co. Ltd. There was some loss of revenue involved in the exchange of these shares for shares in C. A. Parsons and Co. Ltd. in 1960 , which of course will be largely recouped in 1961 .sx The total Stockholders' capital employed in the business is +138,906,000 , the equity capital is +133,120,000 , against the nominal figure of +42,828,000 .sx The 3/- Ordinary dividend represents a return on the equity capital of slightly under 5% .sx TURNOVER UP- RECORD ORDER BOOK .sx The order book is a record .sx Compared with last year the orders received increased from +182m .sx to +233m .sx Our turnover increased from +208m .sx to +215m .sx , and orders in hand have increased from +173m .sx to +181m .sx Sometimes an increase in the orders in hand is regarded as a wholly favourable feature , but this is only true to a limited extent .sx If the growth in the order book is not matched by parallel growth in engineering and manufacturing capacity it would adversely affect our delivery dates .sx At the figure of +181m .sx orders would appear appropriate and satisfactory in relation to your business and its annual turnover .sx I would also remind you that the order book in lamps and lighting , domestic appliances and television and radio is , from the nature of the business , only an insignificant percentage of the turnover .sx New Telephone Cable Subsidiary .sx Although the deal was not completed until January 1st , as part of the rationalisation in the cable industry , we increased our shareholding in Southern United Telephone Cable Co. Ltd. by purchasing from British Insulated Callender's Cables Ltd. the major proportion of their holding .sx We now own 74 1/2% of the Company .sx Its name has been changed to Telephone Cables Ltd. and it is now a subsidiary .sx The balance of the shares are held by our old associates in this venture , Enfield Cables Ltd. , and it is a matter of satisfaction to all of us to have them as partners .sx The general condition of the electrical industry has made it desirable , and will continue to make it desirable in certain fields , particularly that of research , to engage in co-operative enterprises in order to conserve technical man power and reduce the heavy expense entailed .sx 960 is regarded by your Directors as a disappointing year because the increased profits for which we had budgeted were not realised .sx Cables , Telephones , Lamps and Nuclear Power .sx I told you last year that during 1959 we had four parts of our business which were causing us anxiety .sx I recapitulate them :sx they were cables , telephones , lamps and lighting and nuclear power stations .sx You would wish me to report on them .sx First , we were engaged in rationalising the cable part of our business at a time when demand for cables was particularly buoyant , and when prices were particularly low .sx During 1960 , the average prices of cables in the two main categories , mains cables , and thermo-plastic and rubber-covered cables , were still about 17% below what they were in April 1959 , and since 1959 we have had to absorb both an increase in wages , and the extra cost involved by a shorter working week .sx It proved to be a difficult and complicated task to bring about this rationalisation and the savings consequent upon it , and we were unable to do so quite as quickly as we had expected .sx It is now practically complete and profits should be made in 1961 .sx These facts should make a considerable difference to the revenue of the Company in the present year .sx Secondly , telecommunications .sx Although Governments are unused to thanks , the reorganisation of the Post Office as a trading department , which now does not have to return its surplus at the end of each year to the Treasury , will be widely applauded .sx Its new status enables the Post Office to plan ahead , and we in our turn , as manufacturers , can similarly plan on a more stable foundation , and so bring employment and production into line with the needs of the Post Office .sx The Telecommunications Division , in 1960 , traded at a marginal loss , but the outlook for 1961 is more favourable , and although the equipment which we supply is rigorously costed by the Post Office , we expect a moderate return on the capital employed .sx Thirdly , lamps and lighting .sx For three or four years , and in face of falling prices , we have made strenuous efforts to rationalise our production and to reduce our costs .sx I am glad to say that this long and intricate task is now practically completed .sx In 1960 we increased our share of the market , and traded at a better though still inadequate profit .sx Some further improvement should be made in 1961 .sx Fourthly , nuclear power .sx The Berkeley Station is due to come into commission this year .sx I can tell you no more on the outcome of the contract than to repeat what I said last year , which is that the sum set aside is what prudent people would allow against contingencies .sx I am not in a position to release any of the ear-marked reserve to revenue or to our General Reserves , nor on the other hand do I think it necessary to increase the reserve at this moment .sx You will remember that last year the interests of A.E.I. John Thompson Nuclear Energy Company Ltd. were amalgamated with those of the Nuclear Power Plant Company into a new partnership called The Nuclear Power Group .sx This merger has enabled large savings to be made in technical staff and in costs , and the operations now appear to be adjusted to the likely volume of orders .sx In July 1960 the new Group received the order for the Dungeness Station , the largest projected station at that time .sx The risks involved in tendering for the second station are far less than those involved in the first , when we were breaking new ground , as the earlier problems can now be accurately assessed .sx It should be remembered that competition is still extremely keen , but we expect to make a modest profit upon the station .sx The nuclear generation of power is going to be a permanent feature of the national economy , and both as a source of revenue , and as a protection of our conventional business , the reasons which impelled us to enter this field still seem unassailable .sx I cannot but express my disappointment that the engineering and scientific effort at Berkeley may be rewarded with a loss .sx On the other hand , if you regard the money which we may lose as a development expense and not as a contractual loss , large though it may be , it brings the whole subject into closer perspective .sx Such were the four parts of your business which gave us anxiety at the close of 1959 .sx I believe that they are all now in a much better posture .sx DOMESTIC APPLIANCES , RADIO AND TELEVISION COMPONENTS HIT BY HIRE PURCHASE RESTRICTIONS .sx Before I deal with the future , there are two other matters concerning 1960 to which I must refer .sx