UNION COMPANY.

Dominion, Volume 6, Issue 1854, 13 September 1913, Page 7

UNION COMPANY.

REORGANISATION SCHEME. SIR J. MILLS'S REVIEW. OLD COMPANY WOUND-UP. •, On Tuesday last tho original Union Steam Ship Company of Now Zealand died, and a now concern stopped into iia shoes. TIIO principal difference between tho new company and tho old one is that tbo capital has been increased from £1,000,000 to £3,000,000. An interesting reviow of tho affairs of tho company was made by Sir James . Mills, • tho managing director, at tho shareholders' meeting, at which the formalities were' completed. In tlio course of his tg- - marks, Sir Jamos Mills said: , J he present company was formed in 1 , »J'£ ar3 Ago—with a nominal capital of £2-50,000 in 25,000 shares of £10 and of thoso 11,917 shares v ero ( taken up during tho first year, representing a paid-up capital of £119170 held bys3 shareholders. Tho t tho company was established, as sot.forfh in the Memorandum of Association, were to purchase three small steamers, which were being operated on tho coast by a local proprietary, trading under tho namo of the Harbour Steam Company, of which I was, managing owner, and two now steamers then in course of construction in Great Britain, .and generally to carry on the ordinary business of a steamship company. It was with these fivo steamers, having an aggregate gross tonnage of, 2126 tons, that the" company commenced in 1875. Tho company's operations at that time were very limited. They consisted of a weekly servico from Dunedin to Onehunga, via Lyttelton, Wellington, Picton, Nelson, Taranahi, and back, by tho two new steamers to which I have referred, while the smaller vessels ran short coastal trips between Dunedin and Lyttelton, via intermediate ports, with occasional trips to the West Coast of tho Middle Island.' Rapid Crowtli. "With tho growth of 'population and trado in the colony, however, the business of the company progressed rapidly. Additional steamers were built and'purchased from time to time, which absorbed the full amount of tho original capital, and. rendered it necessary for lis to increase it. This was dono in September, 1879. The capital was increased to £500,000, and at the same time the articles of association were altered to permit' of the establishment of a London Board. During the following year our trade expanded rapidly, and we continued to add to our fleet until, in 1891, wo found ourselves with 53 steamers of 56,767 tons, including fleet of tho Tasmanian Steam Navigation Company, just then pur- ! chased. The capital of the company was then increased to £1,000,000, and i some further alterations wero made in the articles , of. association to pormit of the opening of a branch register at Hobart, and to enlarge our powers in other respects where it appeared to be necessary. Again,, in 1897, wo began to feel that our operations wero hampered by the limited powers conferred upon the company, undor its original memorandum, ,and in April of that year wo held a general meeting, when a series of resolutions was adopted, greatly oxtending our powors, and making further alterations in tbo articles, and in due course these were confirmed, by tho Supreme Court. "' Sinc.o./that ,- timo- no changes have.bepn made in the constitution, of the company, but in 1907 we subdivided our £10 shares into 10 shares of £1 ;each, and at the samo time brought our paid-up capital'.to £800,000. Tho result of too conversion of our Bhares from £10 each to £1 each was grefttly to increase tho interest of the public in the company's operations. At the present moment shares are held in Great Britain Australasia in nearly equal proportions, while as far as regards members, wo have more shareholders in Australia and New Zealand than in Great Britain. 2575 Owners. _ "This review of the various operations affecting the capital, and constitution of the company brings us up to the present day, and to our latest action in connection with capital in the shape of • a recent issuo of 200,000 shares which completed our authorised issue,, bringing the paid-up capital up to £1,000,000, held by no fewer tban 2575 shareholders, while the tonnage 'owned by the company has increased to 75 steamers of an aggregate tonnage of 232,147 tens, indicating something liko 212,000 horse power. ... We have added to our local fleets during the past two years no. fewer than 13 vessels of an aggregate tonnage of 73,780 tons'. While saying this, I may add that our wants are not yet by any moans supplied, as apart from any further expansion of trade to bo provided for, we shall have to continue building from yoar to year to replaco some of tho older ships which aro not now wholly suited to modern requirements. "Wo also find ourselves led into tho expenditure of capital in other ways in furtherance of our business. I refer to ■ tlie acquisition of sites and tho building of office.premises at various important centres of trade.. It is essential that wo should occupy suitable sites and premises; and in most cases, in order to occupy fittingly tho sites acquired, wo . have had to build premises somewhat beyond our own present requirements. Again, as you know, wo havo secured a ' •largo, interest in tho Patent Slip Com- . pany in Wellington, and havo erected someivhat extensive repairing works, i and also a large laundry to overtake : our own work. This has involved an > expenditure of a considerable amount of ' capital. We havo also considered it de- : sirablo to,erect an hotel in Suva, now 1 approaching completion, for tho purposo s .of encouraging tourists from.Now Zea- ] land and Australia to . visit Fiji, as a winter resort. These instances' will show, you tho demands mado upon us, and, no doubt, from time to time wo ' shall be called upon to make invest- 1 mentis in other ways, in order to bring c 'grist to tho mill' supplementary to our ' shipping business. c k c Big Insurance 1 ' Fund. "I think shareholders will recognise i that tho sketch I have given of tho , company's operations, and of tho de- \ mands we havo to meet from time to t timo, will bo looked upon, as good and sufficient reasons for our . asking for a j further increase of capital and inoro ] ample powors than wo possess under \ our present memorandum and articles of j association. When contemplating these requests, wo thought it well to make proposals at the same timo with regard to certain aceumulaed funds of tho company, considering tho time had arrived when tho shareholders might reasonably expect to derive a direct benefit from these. During the years that have gono by the growth of our insurance . fund has been very gratifying. Each I year it has been credited with tho full j amount of premiums which would have j been paid away had our vessels been in- \ sured in theu3ualway; and at tho same time tho charges against tho fund havo been very light. In our last balancesheet it stood at about £530,000, since then it has increased to something liko i £560,000. There are also othor reserves ( at our disposal, in addition to which 1 there is a margin to come and go upon ' in the value at which our fleet stands ( in our books, as during years when trade i has been fairly good, wo wero ablo to t write <lomi our ships somowliat liberally. ' As a matter of fact theso reserves havo , already been utilised as capital, having i

been absorbed in the business and employed for the payment of shins. We, therefore, now propose that theso reserves, to tho ©stent of £1,000,000, shall bo transferred to capital and dealt with in tho shape of an issuo to shareholders, by tho way of bonus, of preference shares for that amount, carrying a fixed cumulativo preferential dividend of 5£ por cent, per annum. This course has commended itself for several seasons. Tho dividend on these bonus shares will bo less of a burden upon - tho profits than would bo the dividend on a similar amount of ordinary shares. Again, preference shares carrying a regular fixed dividend will bo attractivo i to a class of investors who do not care 1 to take the risk of ordinary shares, with 3 tho possibility of a fluctuating dividend. Tho incroaso of capital will, of course, result in a lower rate of dividend on tho " ordinary shares, but tho combined divil donds on ordinary and bonus preference - .shares should certainly not bo less than f the customary dividend hitherto paid. J I feel suro that these proposals will ' commend themselvos to shareholders. 3' "We propose, therefore, 4 tbat tho . capital of tho new company 'shall be £3,000,000, consisting of 3,000,000 i sharos of £1 each. Of' thoso three 1 millions two aro required to pay for tho E property taken over from the present j company, one million being represented , by ordinary preference shares, authority t' to issuo which wo aro now seeking. It ) is not proposed to issuo the third mil- . lion immediately, but to do so from . timo to time, as may bo required. Tho j best method of effecting tno_ changcs j proposed, has been the subject of a ! good deaf of consideration by the board, j Acting upon counsel's advice, they were [ satisfied that tho alterations could bo < carried out most readily and most ext peditiously by a voluntary liquidatjon • of tho company,'and its reconstruction i on a fresh basis. This is tho usual . practice now adopted where a company i desires to raise additional capital with . a view to widening its sphere, of opera- , tions, and also to extend its powers under its memorandum and articles of association. You will understand that this operation is almost entirely a matter of bookkeeping, and does not affect tho business of the company in any way. Tho new company will bear ,tho same namo as the present, and will simply 'step into its shoes,' and carry on its business without interruption. I Looking Back. In acknowledgment of a vote of .thanks to the directors and staff for their successful management of tho company's business, Sir Jamos Mills, said that by passing tho resolution they had olosed, so to speak, the record of the original Union Steam Ship Company of Now Zealand. It marked an epoch in tho history of the company, and as that was probably the last opportunity he might have of addressing such a'gathering of tho shareholders of the old company, he would perhaps be allowed to indulge in a few recollections of tho original personnel of tho company and of the events in its history. Very little short 'of two-score years—nearly a lifetime—had elapsed sines the business of the company was started, and he found himself now tho only member loft of the original board who was still in harness. It seems but yesterday since" ho sat in tho offico of tho company in Crawford Street, then on the water front, and watched through the windows tho' loading and discharging of tho pioneer steamers—tho .Maori, of 174 tons gross register, and the Beautiful Star, of 176 tons. At that timo who could have foreseen that tho company would grow to its present size, and that it would ever own such a splendid ship as tho latest'addition to the fleet —, the Niagara, a steamer of 13,500 tens and 14,500 horse-power?. ' Sir James Mills then went on to describe the changes that- had taken, place in the propelling power '; sintio - tho formation of tho company. He" was Happily re-, miniseent'ot tho personnel of ihe original board, recalling the names of Sir .George M'Lean, Messrs. MacNcil, Tewsley, Cargill, and'J. 11. Jones. Ho mentioned also others of more recent date who had dono good work on the board and as employees of tho company. V 4500 Pflen at Sea. In speaking of the trade of the company, Sir Mills said that whereas tho earliest trades were confined to the coast of New Zealand, the fleet of iS ships was employed far and wide. To givo some idea of their distribution and of the trades in which they, wero employed, ho might say that in their coastal and intercolonial running they had .over 40 ships running. In tho trade between Tasmania and the mainland of Australia they had some II ; ships engaged. . In the Pacific services, which included the Vancouver mail service, and tho various island services, there were 11 ships employed. In tho overseas trade—Calcutta, Great Britain, etc.—they had six ships employed. On - their voyages theso steamers covered no fewer than 3,000,000 during the year, and in' doing so consumed very close on 600,000 tons of coal. During the past year they handled no less than 2,800,000 tons of cargo and coal, •while the passenger steamers carried something like 250,000 passengers. Tho number of the employees afloat was no fewer than 4500. This was a record which they must look upon with some gratification. Tho company hacl had its dark days—periods of dull trade and keen competition—and very possibly it would have similar periods of anxiety during tho course of its career; but for all that they might look confidently for a steady development, as without doubt there was a great future before these southern Dominions. Tho company, in conjunction with the sister companies on tho other side, must put forth its best efforts to assist in tho development of the trade and commerce of our southern Dominions. The future of tho company, however, was in tho hands of tho younger men, and he was suro they would appreciate tho policy . of the. directors, when' filling appointments on tho board, of selecting mon of experienco in tho primp of life, a policy which they also followed when selecting men for the' more responsible posts in the management. In this way they ensured tho vigorous conduct of tho company's business in the future, i — —