THE FLEET

Purser's Office

Cunard Steam Ship Company Meetings:

The Seventieth Annual General Meeting April 1947

The SEVENTIETH ORDINARY GENERAL MEETING of the Cunard Steam Ship Company Limited was be held on April 30 at Liverpool. The following is an extract from the statement by the CHAIRMAN Mr. Frederic Alan Bates, M.C., A.F.C., D.L., reviewing the activities of the past year, which was circulated with the report and accounts:

I feel you would like me to say a word or two about the very grievous loss which the company suffered so unexpectedly by the death of its chairman, Sir Percy Bates, on October 16 last. A member of the board of directors since 1910, deputy chairman of the company in 1922, and chairman of the board since 1930, Sir Percy had devoted himself in all changes of fortune and they were not a few - with untiring zeal and energy to the advancement of the company's interests. He had vision, he had courage to act, he led in the sense that his honesty and fairness brought men along with him, and he was considerate of others. The company owes much to him, and we, his colleagues, miss his wise counsel and inspiring leadership.

In making his annual statements Sir Percy liked to regard them as being all links in a chain. Guided by remarkable provision and long experience. year by year he added to the links, and the last one was added when the Queen Elizabeth sailed on her maiden voyage on October 16, 1946, leaving him behind. It is our part to go on adding the links and never to neglect the chain.

Since our last annual meeting four new directors have joined the board - Mr. Robert Crail, the general manager of this company and of Cunard White Star Limited; the Hon. David Bowes-Lyon; Colonel Alan C. Tod, C.B.E., and Mr. B. H. Russell. Mr. Bowes-Lyon has just returned from America, where, at the request of our associated companies, he took the opportunity of visiting some of their offices and organizations. Colonel Tod is well known to you, with wide business activities in Lancashire and London. Mr. Russell has for many years been the London manager of the company as well as London manager of Cunard White Star Limited. These four gentlemen are most valuable additions to the board.

The accounts for 1946, it will be noticed, are submitted in a somewhat revised setting which it is hoped will promote clarity and facilitate comparison between the years. Owing to the existing uncertainty as to the form of figures which may be deemed appropriate for shipping companies in the national interest under the new Company Bill now before Parliament, no attempt has been made to anticipate the legislation.

PROFIT AND LOSS ACCOUNT

In the profit and loss account, the receipts on the credit side show a substantial increase of 373,253GBP. The main part of this increase comes from earnings and commissions from our directly owned shipping interests in Europe and Mediterranean trades. Dividends are up by nearly 44,000GBP and there is a profit of 66,392 GBP on the sale of shares in a ship repairing company and of a leasehold property. The continued holding of these for trade purposes was deemed unnecessary, so opportunity has been taken to realize at a profit.

On the debit side, the changes in expenses are self-explanatory. The increase in office expenses is unavoidable as peace-time organization expands. The items against interest on debentures and loans reflect the arrangements made for repayment of the last of our secured debts. Income-tax appears at 586,305 GBP against 457.328 GBP for 1945. The final balance of profit comes out at 699,064 GBP against 445,917 GBP.

BALANCE-SHEET ITEMS

In the balance-sheet a figure requiring special notice is the unsecured loans from bankers of 600,000 GBP which covers the residue of our former mortgage indebtedness. This in 1945 amounted to 1,200,000GBP and has been paid off partly by the bank loans and partly from our cash resources. The changes in deposits with the company are unimportant; the capital is the same, as are also the loans of 3,700,000GBP from subsidiary companies. The balance of 92,709 GBP due to a subsidiary company reflects no more than ordinary trading transactions. Under the heading of liabilities, reserves, and provisions the increase in creditors, &c., is mostly due to an addition of 167,968 GBP for taxation liabilities. On the other side of the balance - sheet ships are reduced by 9,214 GBP being the usual annual depreciation. The change in value of freehold and leasehold properties is due to depreciation and the sale of a property no longer required, to which I have already referred.

The valuation of subsidiary companies' shares remains the same and in no way exaggerates the value of our holdings, while the small change in figuring against loans and balances due from subsidiaries is only a matter of current trading. The declining value of shares in other companies arises from the sale of our interest in a ship-repairing company as already mentioned. The increase in debtors, agents balances and open voyage accounts reflects the ups and downs of day-to- day transactions. The reduction of 90,734GBP in the cash at bankers is, apart from trading variations, due to the operation of repaying debentures and loans.

RESUMPTION OF PEACE-TIME TRADING

Speaking of our own activities in shipping, I need perhaps hardly remind you that we have continued to retain a direct interest in the trade from the United Kingdom to the Mediterranean, as well as in the short sea trade to Northern France, latterly associated with the Channel Islands. It is close upon 100 years since the company became established in these trades, and it is pleasant to be able to record that upon their gradual release from requisition, the company's cargo ships were able to resume their peace-time berths. There was considerable activity in the trades in question, and in association with our colleagues a substantial amount of additional tonnage was chartered to assist in the movement of the cargo. Arrangements are meantime in hand for replacing the "Bosnia," which was lost by enemy action at the outset of the war. Of course. as the existing tonnage ages, we must make suitable provision for replacement which present indications suggest may be in the neighbourhood of three or four times the cost of the older ships employed in this trade. With regard to the proposed dividend, the board have decided that the results of the year, after transferring 200,000GBP to reserve, justify a final dividend of 7 1/2 per cent., against the final 5 per cent. plus 2 1/2 per cent. bonus paid last year.

Perhaps I may here usefully recapitulate some salient facts regarding our main associate companies. During the year 1946 steady progress has been made in reorganizing ships and services in their former peace-time trades. No opportunity is being lost of maintaining the ships in the several fleets at a high standard in all departments, and much planning has taken place to make the best use of the space available for crew quarters. In general, the shipbuilding and reconditioning programmes at present in progress by each of our associate companies are heavy. In view of this there is satisfaction in the thought of the great importance attached by the Government in their recent Economic Survey to the contributions which British shipping and shipbuilding can make towards balancing the nation's trade.

CUNARD WHITE STAR LIMITED

This is our Atlantic associate, which is technically a subsidiary, though, we own only 62 percent. At December 31, 1946, all the company's passenger ships, with the exception of the "Queen Elizabeth," were either still on Government requisition or undergoing reconditioning. The "Queen Elizabeth" had run her maiden voyage from Southampton to New York in October.

On completion of the " Queen Elizabeth," the " Queen Mary " was returned to Cunard White Star for reconditioning as well as the " Mauretania." Since the end of December the " Britannic " has also been returned by the Government for reconditioning. All efforts are now being bent to bring these three ships back once more into the company's peace-time services as soon as possible after making good the wear and tear of trooping voyages during the war. We are greatly indebted to the builders of the respective ships, namely, John Brown and Co., Cammell Laird and Co., and Harland and Wolff, Limited, for their splendid cooperation with us in this work.

Cunard White Star is also engaged with a considerable building programme- " Asia " (delivered this month), and " Arabia" at Sunderland; "Media " and “Caronia" at Clydebank; " Parthia " at Belfast. This brief reference to the reconditioning and building operations of Cunard White Star will suffice to indicate the heavy expenditure and great responsibilities at present being borne by that company. The accounts of the company for the year ending December 31 last take about six months to complete.

PORT LINE LIMITED

As mentioned in the 1946 report of the directors, this company also suffered severe losses during the war, but pursuing a progressive building policy, has already replaced eight vessels and is building three more. They are refrigerated vessels, which are necessarily at the present time very costly to build, the largest running to well over 1,000,000GBP Consequently, depreciation and charges such as insurance are a heavy liability, requiring careful treatment. The Port Line is 100 per cent subsidiary. Its accounting year is made up to March 31, but owing to the great length of the voyages and the long delay in accounting for expenses and receipts in the far-off Antipodes, it takes the best part of another year to complete their accounts. No practicable way has yet been devised of enmeshing their annual figures with those of the parent company.

THOS. AND JNO. BROCKLEBANK, LIMITED

One of the oldest shipping companies in the country; it was building ships in its own yard for its own trades in the 1790's. During this war it lost 16 ships, but has steadily pursued a rebuilding policy, so that now the company has 19 ships running and two building. Its special trades lie between the United Kingdom, Continent, India, and America. This is 100 per cent subsidiary. Its accounts are made up to December 31, but no system has yet been found to facilitate their completion without six months or more delay. The current trading of this company is satisfactory, but there is a red light showing from an unexpected direction. The company's policy of building fast cargo liners at greatly enhanced engine cost to save voyage time is being frustrated by delays in the ports, particularly in the United Kingdom. Whereas their average pre-war round voyage consisted of 60 days in port and 66 days at sea, to-day their new liners, costing upwards of 500,000GBP each, spend 87 days in port and 51 at sea.

COMBINED BALANCE - SHEET

Much thought has been devoted to the problem of providing an aggregate figuring in balance-sheet form which could give the stock- holders a reliable picture and could not be subject to misunderstanding. The board has been very anxious to do this if a way could be found, and they are hopeful of finding a satisfactory solution. Indeed, the examination of the problem emphasizes the difficulties which arise from the varying lengths of the voyages and the unavoidable delays in receiving at head office the necessary vouched-for figures from distant lands. Moreover, the best way of including a 62 per cent owned company of the magnitude of Cunard White Star Limited is a matter of opinion. The very factors, however, which make combination of figures at the Cunard annual meeting difficult are themselves a source of strength to the stockholders' interests. The value of a wide spread in investments, both in time and character, may be difficult to assess, but at least I can say that the associated fleets continue to be operated by separate virile and resourceful companies which produce satisfactory and sound results. The ships built and building are of widely different types, and the trades they serve are as diverse as the Continents and seas themselves. On the cargo side, their manifests are a veritable lexicon of commerce. These diversities, though awkward in some respects for combined accounting, greatly advantage the Cunard parent's interests in the same way that a well-spread investment can be preferable to a narrow one in meeting the ups and downs of trade. Particularly is this true of the passenger traffic which so concerns the fortunes of our Atlantic subsidiary, largely dependent as they are on the seasonal trade of one ocean alone and subject to the current regulations in force from time to time affecting passengers of different nationalities.

HAZARDS OF NORTH ATLANTIC FLEET

Highly specialized, the North Atlantic fleet, apart altogether from the hazards of the sea, which are great enough, has to meet financial hazards. This is true of both the American and Canadian trades. In the latter the Cunard White Star was deprived during the late war of six of its pre-war passenger and cargo ships, and the problem of their replacements is being given very close study. To build for these trades is as difficult as to operate in them. The contract of today is not the ship of tomorrow, but of some future years, with distant uncertainties needing a prophet's vision. And who would be a prophet? The estimated cost to build is now running so high and delivery so uncertain as to deter the bravest. But in spite of all the risk, enough tonnage must be built and replacement provided for at more than twice the pre-war price. No one with experience of the financial vicissitudes of Atlantic companies can ever forget the need for an unwavering policy to create reserves. A ship is built to offer freedom of travel and win her public for 20 years on, but there remains the hazard of the passenger list, which is never sure till the berths are filled and which may indeed be shriveled in a year by some incalculable factor operating to restrict the human urge for travel.

Finally, although we have now reached the level of a 10 per cent dividend, it must not be forgotten in warning of the changing fortunes of the trade that in 16 years of the last half century stockholders have had to suffer without any dividend at all on their investment, and during hard years of the company's struggle for survival, the staff, both afloat and ashore, have suffered reductions in pay. For the seagoing personnel negotiations under the National Maritime Board for improved scales or pay and conditions have gone far to redress the position, while new scales are also in operation for the members of the shore organization. During the past two or three years steps have been taken to improve the scale of pensions under the company's superannuation scheme, although it is still below the scale in force prior to the depressed years. The directors have presently in their minds to continue this policy in order to bring the pension fraction nearer to its original level. If trading conditions continue satisfactory it is hoped that something further in this direction may be possible.

There is now a total of 21,150 stockholders, of. whom a very large number have been members for many years. The solid support of the members is a great asset to a company just as is the life-long devotion to our interests which is given by so many of our staffs. Recently, during an inspection of a ship undergoing reconditioning, a man on duty told me he had had 40 years service with the Cunard, including seven years war service in the ship. To men like him, to all the officers and ships' companies afloat, and to all the staffs ashore at home and abroad, I send a message of thanks from a company which none is more humble or proud to serve than the chairman of the board.

Read The Chairman's remarks for 1948