COMPANY MEETING
CUNARD STEAMSHIP COMPANY INCREASED TRADING: FUTURE BUILDING POLICY THE sixty-first ordinary general meeting of the Cunard Steamship Company was held at Cunard Building, Liverpool, on Tuesday.
Sir Percy E. Bates, Bart., G.B.E., chairman, who presided, said : The Cunard profit and loss account after providing the usual depreciation is £1,700 better than last year. On paper the company is still marking time, but in fact there is real progress.
For the first year since the formation of our major subsidiary, Cunard White Star Ltd. both companies have a clean certificate from the auditors, and this is a fact of importance to you because, without it, making money available for dividend by either company is very difficult. The reason for the clean certificate lies in the Atlantic, where the 1937 results of Cunard White Star have enabled that company to retrieve a substantial portion of the past and the directors to present figures which should form a firm basis for the future.
Operating expenditure is up by £623,315, due to increases in the cost of every item. As we have done more business on the Atlantic, carried more passengers and more cargo, operating receipts are higher by £1,340,722, and the working improvement amounts on balance to £717,407, showing a total operating profit of £1,305,829.
Consideration of the figures encouraged the directors to set out on a policy of depreciation which would be sound. £135,143 has been written off the Queen Mary' for 1936 and £976,280 off the fleet as a whole for 1937. The whole of the money spent during the year on ships Nos. 552 (' Queen Elizabeth') and 1029 (' Maure- tania ') has been provided out of current cash, the amount being £1,535,595. Depreciation written off in cash of £1,111,423, and from share premium account of £6,348,662, leaves a figure for ships and payments on account of new ships of £12,962,148.
PROVISION FOR NEW SHIPS By itself this means little, but taken in conjunction with the profit and loss account it means a good deal. If the company maintains a yearly allocation out of earnings of £976,280 in respect of the older ships and the 'Queen Mary,' the balance-sheet figures for these ships will be reduced to scrap values when the 'Queen Mary' attains the age of 25 years and when each of all the other ships attains the age of 20 years. We believe this to be an attainable target as well as a correct one in the sense that further annual ship- building of an order approximate to our annual depreciation figure should enable the company to maintain its place in the Atlantic.
The depreciation written off the 'Queen Mary' was remitted to the Treasury in cash, is held by them, and is available on the applica- tion of the company, but at the discretion of the Treasury, for further ships suitable for the company's business. On a slight adjustment of arrangements completed in respect of finance for No. 1029 I am satis- fied the 'Queen Mary' depreciation money, remitted or to be remitted to the Treasury, will be available to take its place with our free money or with finance provided by others. For the plan for depreciation, the figures of which have logic behind them, the directors claim your commendation.
The mortgage on our Liverpool building now stands at £300,000, £120,000 having been paid off during the year. Cunard shares in other companies at £119,346 have returned over 7 per cent.
LARGEST LINK WITH U.S.A.
In the large figure of shares in subsidiary companies of £13,675,225 is the book value of our Cunard White Star shares at £9081,777. This represents our permanent stake in the Atlantic, and we arc concerned alone in what it can be made to yield. The figures show clearly what it produced last year ; what it may produce this year depends mainly on factors outside the company.
The company is the largest link between Europe and North America, and its prosperity is entirely bound up with the prosperity of these two continents. That you have a good organisation working on both sides of the Atlantic is shown by the large increase in the business handled in. 1937 without corresponding increase in organisa- tion expenditure. If the business is there we can get it.
The policy of building new ships is in no way responsible for the absence of dividends, and indeed in my view is the only policy which can lead to their resumption. Shipping of any kind is a highly competitive trade, and Atlantic shipping is perhaps more keenly competitive than any other form of it. We must continue building or our business will be taken by others. The two ships building at the present time, Queen Elizabeth ' and Mauretania,' are both absolutely needed for the company's business, and indeed I am very glad that the new • Mauretania will be in service next year.
Report and accounts were adopted.
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