BRITISH SHIPPING

Evening Post, Volume CXV, Issue 12, 16 January 1933, Page 3

BRITISH SHIPPING

THE P. AND 0. YEAR

WHY NO DIVIDEND

(From "The Post's" Representative.) LONDON, Bth December. The Hon. Alexander Shaw, chairman of the P. and 01 Company, announced at the annual meeting yesterday that no interim dividend, was paid this year on the deferred stock, and the board were unable now to recommend any final dividend in respect of it. "They have reached this conclusion with regret," he said. "But after they had made, with the assistance of our auditors, Lord Plender and his partner, Mr. Kilpatrick, a most careful review of the results of the year, and had considered the prospects and the difficulties of the times, the board were unanimously agreed that no other conclusion would be consistent with the best interests of _the company and therefore of *the proprietors themselves. "What was the situation with which the board were faced? The late chairman at one annual meeting after another made no secret of the fact that only the conservative finance of past years had enabled the board to recommend any dividend on the deferred stock. He was quite frank about it./ Indeed, it is known to us all, that, in common with many other forms of trading .enterprise, shipping concerns have had in recent years to draw upon their reserves to put them into a position to pay their ordinary dividends. You will all agree that up to a point such a course is justified, especially if the horizon seems likely to clear; but you will equally agree that such a policy has limits, and that it ought to cease well short of the point ■where the inherent strength of a great concern, and therefore, of course, its future earning power, may by any possibility be prejudiced. : "THE THORNY PATH." "Becent experience in the shipping world, as well as in other spheres of business; has shown the-undesirable results which attend the continued payment of dividends which are not justified by earnings. In bad times there comes a juncture, when the choice has to be made between the easy path of distributions to stockholders which cold prudence does not justify, and the thorny and uphill path of. further drastic economy in operation and restraint in dividend policy. The board have .deliberately chosen the latter road. -you'^ilV I know, realise that It .Is" far ■ trom pleasant to have to ask the deferred stockholders to forego their dividend this year. But I am confident that they -will support the board in the determination to husband resources in the present calamitous state of shipping, and so will assist to maintain the streagth of this great ■undertaking, and the security of their own investment," ■ • - ■

The-fuller.form in which the accounts are presented, and the publication of a consolidated balance-sheet showed (the chairman said) that the board had been passing in careful review'the whole position the P. and O. Company itself, and of the entire group. Every effort had Deen_made to reduce expenditure without sacrificing the efficiency of the fleet, or the attractiveness of P. and O. vessels to passengers and shippers—indeed, the comforts and amenities enjoyed by the passengers had been increased. Incidentally, the cost of the Suez Canal dues, which are paid in gold francs, had increased seriously since the country had left the gold standard. «

The chairman was able to- describe a rearrangement of liner services which while giving certain better facilities for passengers, enabled substantial economies —estimated to amount to £300,000 in a lull year—to be realised.- A favourable reference was made to successful holiday crmses r and there was strong comment on fetate-subsidised competition. • , GROUNDS FOR HOPE. , Sir Fortescue Flannery, one of the shareholders who spoke after the chairman, said there were many causes for hopefulness. The value of the fleet has been written down, he said, "some £12,500,000 having been written off the cost- That surely i? a hostage to the future. All the dividends upon the debentures and preferred stock have been paid; that frees the future again and gives hope to the deferred stockholders ijwe have 41-ships navigated by skilled and experienced officers and men and it is a remarkable fact that during the twelve months the navigation of all those 41 ships has not led to a single accident or mishap. I am myself one of the members of Lloyd's and I venture to say that, it that sort of experience could be repeated even m proportion throughout the Mercantile Marine,, the position of Lloyd s underwriters would be as happy as^the day is long. Fyy r,VT^°+^ aVe ' ? S H Seems 1° me > done *c right thing. I am a sufferer like my mends round about me, but I suffer gladJy when I look to the future. I believe that your policy of maintaining the fleet witn its perfect .organisation, your policy of conserving the present for the benefit jit *uture- 11 have a happy result and that some day we may perhaps sit tiere under your chairmanship, and be able to congratulate you upon the success of all that you have indicated so eloquently to us to-day."