UNION STEAM SHIP COMPANY.

Otago Witness, Issue 3021, 7 February 1912, Page 7

UNION STEAM SHIP COMPANY.

Criticising the report and balance sheet of the Union Steam Ship Company, MiAlex. Jobson, in an article in the Sydney Sun, says:—" Though the profit of £116,431 earned by this company in the September, 1911, year ehows an increase of £11,600 oyer the previous period, it is not quite as high a profit as one might have expected, having regard to the great prosperity of tho Commonwealth and New Zealand. Probably few persons, however, accept tho published figures as being the actual total of net profit, for at times the earnings show extraordinary riees, not to be accounted for by any normal growth in profits. In 1904, for instance, £129,928 was admitted, £39,000 more than 1903, and £33.000 above 1905. Then, again, 1907 earned £144,324, though 1906 showed some £50,000 less, and 1903 over £97,000 more; while in tho following year there was an unaccountable drop of over £143,000. These variations arise from no natural growth, but are created by tho will of the company's directorate. The whole profit of £116,431 was not, of course, admitted, only £64,958 being shown in the profit and loss account. A sum of £51,473, added to tho insurance fund during tho year, accounted for tho balance. Of this latter gain, £8334 was taken, and with £63,333 of the profit, applied to pay two half-yearly dividends averaging about 9 per cent, per annum. The balance of £1625 was added to the profit and loss account, raising it to £21,C05. A far better index to this company's progress than its profit earnings is the growth of its fleet and the shipbuilding programme now in hand. Eleven years ago the tonnage of tho fleet wae 77,738 tons, with a book value of £746,000. about ±,9 12 s per ton. Now it is 175,858 tons, and the book value £1,187,382, only about ££ 14s per ton. There are, in addition, four new steamers building, whose aggregate tonnage will be 20,450 tons, and the progress payments on which are included in the above book value, eo that tho actual value per ton is still lota than £6 14s. The difference; of almost £3 per ton on a tonnage of about 176,000 works out at approximately £500.000, not very far short of half the present book value. The company must have been doing very well indeed to be able to value its boats now at £5C0,000 less on tho average than it did eleven years ace The company s programme of new shios is a big one and speaks volumes for the' enterprise of tho directors, and also for tihe profit-earning power of the company which warrants such an advanced nolicv Tho financial position of the company "has improved materially during tho year, for practically the whole of the increase of £44 188 in the assets, to £1.969.964, was derivlod from profits. The three gVoups of liabilities —debentures £161,533 (£152,933), voyages pending, eic.. £21.411 (£22.092). and sundry accounts £291.147 (£289.642)-have in tho aggregate declined by £575. Of tho rotbl assets, after oaying the current dividend, tho shareholders own £1,455,867, over 75 per cent., which secures their paid-up capital of £300.000 in £l shares fully paid, reserve fund of £150,000, insurance fund £484.602, and the profit and 'oss balance of £21,265.' This surplus works out rather better than that existing in 1910, being now 36s 5d per share as against 35s then. Yet this improvement has scarcely impressed the share market at all. for tho shares selling at 41s in the middle of 1911 aro now changing hands at 395. which contains only 2s 7d for goodwill and inner reserves. This is very low indeed, for it is only about £104,000, which is over £12,000 below the profits of £116,431 earned last year. yhe low dividend rate carries more weigb> fo* at 39s the yield is only iust j—- *■ 12s »,v

cpnt InvesfoTs, too, perha-os, fear the possibility of competition reducing the company's earnings, though such a contingency is surelv very remote."