COMPANY MEETING

UNION-CASTLE MAIL STEAMSHIP CO.

PASSENGER BUSINESS WELL MAINTAINED MR. ROBERTSON F. GIBB'S REVIEW

THE annual ordinary general meeting of the Union-Castle Mail Steamship Company, Limited, was held on April 25th at Southern House, Cannon Street, E.C. Mr. ,Robertson F Gibb (chairman and joint managing director) presided.

The Chairman in moving the adoption of the report and accounts, said: The accounts have been drawn up on similar lines to those for the preceding year, and accordingly there is no difficulty in making a comparison between the results for the two years. Such comparison reveals immediately a disappointing diminution in the profits from voyages during 1938. These profits amounted to £196,000, whereas the corresponding figure for 1937 was £510,000, a decrease of approximately £314,000. You will doubtless wish me to indicate at the outset of my speech the principal reasons for this serious fall in profits. They were: (1) a considerable reduction in revenue from outward cargo owing to the substantial falling off in exports to South Africa; (ii) the heavy drop in revenue from home- ward freight due to a reduction in the rates of freight on fruit, and reduced shipments of wool and other commodities; (iii) the virtual cessation of gold shipments during the last half of the year; and (iv) increased expenditure, particularly as regards fuel, wages and insurance. I shall refer to these in detail later on.

As in 1937, the net profit was affected by substantial special outlays incidental to re-engining, amounting in 1938 to LI to,000. This expenditure is of course, of a non-recurrent character, but I ought to mention that, during the past year, in connexion with the conversion of three steamers to oil-burning, part of the ex- penditure due to items such as renewals and upkeep will be charge- able against revenue and will probably amount to about £too,000.

To the figure of £196,000 has to be added about £81,500 in le- spect of income from investments and properties, which is some £28,500 less than that for 1937. This decrease is largely accounted for by the sale of our interest in the Durban Navigation Collieries, Limited, to which I referred last year, since, although the sale was effected before the end of 1937, that year's accounts received the benefit of a full year's dividend from that source.

To these two sources of profit the sum of about £1o5,5oo has been added, being taxation reserve no longer required following the settlement with the Inland Revenue authorities of certain claims that were outstanding last year.

After various deductions there remains a balance of £171,889 which, with the balance of £150,892 brought forward from last year, gives a total available of £322,781. Of this sum the Preference dividends for the year absorbed £132,945, leaving a balance of £189,836, which we recommend should be carried forward. Your directors much regret that they are unable to recommend the pay- ment of an Ordinary dividend.

FINANCIAL POLICY Having dealt with the balance-sheet, the Chairman continued: I have drawn your attention on previous occasions to the fact that owing to the heavy losses which the company sustained years ago its ts association with another group of companies, its reserves were completely exhausted.

The advances we have been able to secure for the purpose of financing our shipbuilding and re-engining programme have now reached their peak at 4-1 millions, and unless and until we are able to refund these loans, or at any rate part of them, we shall have to continue to make large annual repayments in accordance with the terms arranged. Budgeting as far ahead as is practicable, we anticipate being able to meet these obligations, but nevertheless we must continue to keep a close watch upon our finances.

SHIPBUILDING During the past week our very extensive shipbuilding programme of the past five years has come to an end with the delivery of the Pretoria Castle' op April ,8th. The Capetown Castle' and the Durban Castle' were delivered on March 31st and December 15th, 1938, respectively, and the 'Pretoria Castle," Richmond Castle' and `Rowallan Castle' were launched in October, November and December. During the year also the Carnarvon Castle," Warwick Castle' and Winchester Castle' were re-delivered to us after being re-engined and improved in various ways, and I am happy to be able to inform you that all the new vessels and the re-engined mail ships are proving very satisfactory in service.

. All the units of the company's fleet have been maintained at a high standard of efficiency during the year. At the same time, of course, as you are aware, the object in constructing our four fine new motor-vessels for the intermediate service was to replace five of our older vessels. Pending the completion of the new ships and the conversion of the three steamers to oil-burning it has been necessary to retain the older ships in service, and naturally these five ships cannot compare with our modern vessels for comfort or economy in operation. We anticipate that they will all be with- drawn shortly and our intermediate and round-Africa services will then be operated by nine vessels of an average age of under nine years.

All the company's services were regularly maintained throughout the year, and I am pleased to say that there was no serious accident in respect of any of our vessels.

The most noteworthy event in connection with our services was the completion by the end of the year of our re-engining pro- gramme, enabling us to provide week by week both outwards and homewards a mail vessel operating on the accelerated schedule whereby the voyage between Southampton and Capetown occupies thirteen and a half days as compared with sixteen and a half days previously.

The volume of our passenger traffic last year may be regarded as satisfactory, bearing in mind the influence of the unsettled international situation during the last four months of the year.

It is gratifying to be able to report that the outward and home- ward passenger earnings on our East African Service were main- tained, but our revenue from coastwise traffic declined in com- parison with 1937.

CARGO TRAFFIC As already indicated, it was in respect of our revenue from cargo carrying that our earnings last year received so serious a setback. As regards outward freight the most marked falling-off was in respect of cargo carried in our mail vessels although the other services also suffered to a lesser extent. As you may be aware, the cargo carried in our mail vessels consists very largely of high-class goods, and there is no doubt that the international situation during the last four months of the year was primarily responsible for this marked decrease in South Africa's purchase of this type of goods, although the holding of a General Election in South Africa earlier in the year also definitely affected importa- tions of this class of cargo. With regard to the homeward trade, all our services were adversely affected, but there again the prin- cipal decrease was in respect of cargo earnings by our mail service.

FRUIT RATES With regard to the reduction in the rates of freight on fruit, the position of this company and of the other lines was a very difficult one. For some months preceding the last General Election in South Africa, owing to unsatisfactory prices for fruit in the over- seas markets and the withdrawal of the subsidy previously given by the Union Government there had bceen considerable agitation on the part of growers and others interested in the trade against the level of the rates of freight charged by the Conference lines under the terms of their agreement with the South African Government. This agitation was directed primarily against the Union-Castle Company as the principal carrier of South African fruit. While there is no doubt that the growers were receiving lower prices for their fruit in this country than in the past, the cost to us of transporting the fruit from South Africa so far from decreasing has actually increased in the course of the past two or three years. As you are aware, we not only expended very large sums in fitting the regular mail and intermediate vessels with extensive modern refrigerated holds, but in addition have provided for this trade six costly fully refrigerated vessels. Ultimately, this company, and the other lines engaged in the trade, agreed to the reduction I have mentioned of 7s. 6d. per ton for the one year 1938 only, in return for which the contract with the Government was extended for a corresponding period, it being understood that the fruit-growers would endeavour to re- organise their industry with a view to effecting economies in their costs of production.

The result of the reduction the Conference lines made in the rates for 1938, which cost this company about £85,000, is reflected in the accounts submitted to you today. Yet during the past month or so there has been fresh agitation in the South African Press for further substantial concessions in the rates for the conveyance of fruit.

GOVERNMENT AID FOR SHIPPING It seems unlikely that this company will benefit to any great extent, if .indeed at all, from the schemes for affording Govern- mental assistance to the shipping industry which were recently announced in the House of Commons by the President of the Board of Trade. At the same time, and perhaps more in my capacity as president of the Chamber of Shipping than as chair- man of this company, I should like to express the warm apprecia- tion of the shipping industry to the President of the Board of Trade and to His Majesty's Government as a whole for the very deep interest which they have shown in the welfare of the industry and for the steps they are now taking to ensure that it is in some measure protected against the unfair competition which it has suffered for many years past from foreign lines enjoying the benefit of Government subsidies or operating at considerably less cost owing to lower wage standards.

The Chairman, in conclusion, announced his intention of retiring from the duties of chairman and joint managing director.

The report and accounts were unanimously adopted.