USSCO Annual Report 1978

AnnualI--Inion Ste amShip Companvof NewZealandlimited.'Directors' ReportCompany OperationsThe Companys' ServiceAuditors'ReportConsolidated Statement of Profit and LossConsolidated Balance SheetNotes to Financial StatementsFinancial RecordUnion Company Contribution to N.Z. TradeUnion Company Contribution to Aust. TradeFleet ListExecutiveOffices@ Notice of Annual General MeetingNOTICE lS HEREBY GIVEN that the 66th AnnualGeneral Meeting of Union Steam Ship Company of NewZealand Limited will be held at 2.30 pm on November20th 1978 at the Company's Registered Office, 36Customhouse Quay, Wellington for the followingpurposes:1. To receive the Directors' Report and the FinancialStatements for the year ended 30th June 1978 andthe Auditors' Report thereon.To confirm and declare dividends.To d-etermine the remuneration of the Directors.To record the re-appointment of the Auditors,Wilkinson Wilberfoss, and to authorise the Directorsto fix their remuneration for the year to 30th June1 979.5. To transact any other business appropriate to betransacted at an ordinary general meeting.A member who is entitled to attend and vote is entitledto appoint a proxy to attend and vote on his behalf. Aproxy need not also be member of a the Company.On behalf of the Board,P. E. MaxwellSecretary.Wellington, New Zealand1st November 1978NOTE: Pursuant to Article 105 of the Company'sArticles of Association, the Statement of Profit andLoss, Auditors' Report and Directors' Report will beopen for inspection by any member at the RegisteredOffice of the Company, from 1Oth November untilthedate of the above Annual General Meeting.10121517171818192.3.4.r 1978Registered Office36 Customhouse Quay,Authorised Capital$2s,000,000Paid Up Capital$1 9,000,000 comprising -Ordinary Shares: 17,000,000 of $1.00 each fully paid upPreference Shares: 1,000,000 cumulative 5'lzo/\" of $2.00DirectorsSir Peter Abeleseach fully paid up.Alternate(Chairman, Chief Executive)Sir Reginald Smythe, KBE(Deputy Chairman)Mr J. R. Cribb, OBE(Deputy Chief Executive)Mr B. J. GodfreyMr O. T. Hannigan]Mr J. B. Horrocks JMr R. A. OwensMr R. H. PettigrewSir lan PotterMr C. G. SkeggsAuditorsWilkinson WilberfossBankersNew Zealand and Australia: Bank of New ZealandLondon: Royal Bank of ScotlandBank of New ZealandThe lag lown f f by the Company's vessels today is unchanged from theone used at the commencement of the Company in 1875. The designwas chosen by Mr John Darling, the Company's f irst superintendentengineer, and Captains Macfarlane and Wheeler.The red background was suggested by the flag of the British MerchantFleet, the Red Ensign. The name of the Company made the use of theUnion Jack appropriate and indicates that the Company is majora national carrier.Along with the distinctive yellow banded hull of the Company's ships,the f lag is immediately recognised throughout Australian and NewZealand ports.Wellington, New ZealandMr A. Carmichael, CBEMr W. J. SandmanMr J. G. FelgateMr W. BadhamsMr l. Thomas, CMGMr W. J. SandmanMr J. W. KasslerMr J. G. FelgateMr R. M. Hall

lU Directors' R.portThe Company's net profit afterincome tax amounted to $2,169,000for the year ended 30 June 1978. Theprevious year's trading profit after taxwas $5,208,000 to which was addedprofits from the sale of ships$3,722,000 making total tax a paidprofit of $8,930,000. Thedisappointing result for the 1978 yearwas primarily due to the low level ofcargoes offered for trans-Tasmanshipment and represents a reversalof the upward trend established since1974.As noted in last year's report, theCompany had to contend with theloss of freight arising from theintroduction of two specialised forestproducts carriers built for TasmanPulp and Paper Company Limited.The first of these entered service inSeptember and the second inNovember 1977. Union Company hadanticipated some residual cargo fromTasman, but very little eventuateddue to reduced demand for newsprintand pulp in Australia. In addition, twoother ships of conventional type, onemodified for carriage of ISOcontainers, were introduced into thetrading area.economy was generally morepositive, New Zealand exports, in theface of strong domestic competition,improved only slightly. General cargowas thus far from showing the growthrequired to fill the additional shipsoperating across the Tasman.ln spite of cost inflation, theCompany was able to maintain itstrans-Tasman costs at approximatelylast year's levels. The major factorwas the introduction of our final rollon/roll off vessel, UNION ROTOITI,in July 1977 and the return ofchartered ships to owners.Accordingly the Company wasoperating for most of the year with amodern, highly efficient fleet which isthe result of long term planning.Operating costs were actuallyreduced although depreciation,because of the new ships, rosesubstantially.After thorough a investigation ofcosts the service provided by UNIONMELBOURNE to Adelaide wasdiscontinued in favour of trans-shipping cargoes at Melbourne withforwarding by railto Adelaide. Thefreeing of UNION MELBOURNE fromthis employment and weak demandfor shipping space across theTasman enabled the Company toreduce costs by varying shipschedules. UNION ROTORUA andUNION MELBOURNE were laid upover the Christmas and New Yearperiods and subsequently the trans-Tasman ships operated on varietya of two, three and four weekly cycles.Our \"Seaway Service\" betweenTasmania and the Australianmainland remained successful,showing further increases in turnoverand profits. The trade demonstrateshow modern a roll on/roll off fleet willcover the substantial capitalinvestment in its ships throughefficient working from which bothcustomers and owners benefit.The Company ceased to operate theinter-island link between Wellingtonand Lyttelton for its own account inJuly 1974. Until September 1976 thelink was operated on account of theNew Zealand Government utilisingthe passenger I cargo vesselRANGATIRA. lt is pleaSing to reportthat since January 1978 the cargoservice has again been undertakenby Union Company for its ownaccount using the trans-Tasmanvessels UNION HOBART and UNIONLYTTELTON. The additional cargohas been handled with fewscheduling problems and provides aworthwhile return to the Company.The capacity of the ships and thefrequency of service presents astrong challenge to other forms oftransport.The Company upgraded its service tothe Pacific lslands by introducing theroll on/roll off carrier MARAMA inJanuary 1978. This ship is faster andlarger than its predecessor UNIONSOUTH PACIFIC, which wasreturned to her owners. ln addition toISO containers, MARAMA carries\"seafreighters\", and these areproving popular with shippers.The New Zealand coastal tradesshowed disappointing results dueprimarily to the depressed economy.&AncilliaryActiaitieiThe Company's policy is to seekprofitable diversification in areas inwhich the Company can providespecial management or technicalskills.Stevedoring Division, using skillsderived from servicing theCompany's own shipi, increasedboth turnover and profitability duringthe year. Over 70\"/\" of stevedoringturnover now comes from outsidebusiness. Workshops Division alsoincreased turnover. The Company,through its subsidiary Anchor-\"Marama's new stern ramp gives the Pacificlslands its first express roll on - roll off service:\"t##qlU IiadingAt the commencement of theCompany's financial year, theprovisions of the New ZealandAustralia Free Trade Agreementwere extended. This, combined withthe declaration of 1978 as NewZealand's Export Year, encouragedtrans-Tasman trade. Unfortunately, inspite of a mild stimulus in February1978, the real recovery of the NewZealand economy remai neduncertain keeping import levelsdown. Most ex-Australia cargoeswere affected, including automobileCKD units, chemicals, and metalproducts which are a significant partof the total. While the Australian\"Our latest ship, the 14,400 dwt Union Rotoiti.\"

Dorman Ltd of Nelson, entered into ajoint venture with WhangareiEngineering Company Limited tobuild fishing vessels. Much work wasundertaken in connection withproperty development. Most notablewas the renovation of WellingtonHead Office saving space and therelated accommodation expenses.Other diversification prospects weredeveloped which should providerewards in future years.@Financial ResultsAs noted, consolidated profit for theyear after tax was $2,169,000. Theafter-tax return on shareholders'funds was 4.6%. This return mustbe viewed in conjunction with themuch better return to shareholders of19.5o/\" in the previous year. TheDirectors are not satisfied with theresult and believe an improvementmust take place.During the year, earnings ln overseasexchange amounted to $49,000,000representing more than one third ofthe Company's total revenue of$1 25,000,000. New Zealand'sbalance of payments deficit arisesfrom \"invisibles account\" and it is inthis vital area that Union Companymakes a significant contribution.@ Caital Expenditurert-land .tttnanczngWith the completion of the fleetbuilding programme, capitalexpenditure on maritime operationswas reduced. The only majorexpenditure on fleet was the fitting ofa stern ramp to MARAMA. AdditionalISO containers and forklifts were alsoacquired, advantage being taken oflease-pu rchase inancing wheref satisfactory terms were offered.For the first time, capital expenditureon ancillary activities was greaterthan that on maritime operations. TheCompany made moderatea investment in the upgrading of someexisting properties and in the re-equipment of workshops. TheDirectors are confident that thecommitment of these funds willproduce satisf actory returns.Following delivery of UNIONROTOITI, the repayment phase on allthe loans taken out to purchase thenew fleet commenced. TheCompany's cash flow from annualdepreciation is well balanced againstthe loan repayments falling due.The Company has negotiated acurrency option clause in each of itsloans. All loans were denominatedduring the year in US dollars and,due to the weakness of this currency,an unrealised exchange gain of over$3 million was derived. ln line withthe Company's previous policy ofcapitalising exchange losses, thisyear's gain has been credited to thebook value of the ships financed byth\" l*lU DiuidendsA2.5Y\" interim dividend on ordinaryshares, amounting to $425,000, hasbeen declared out of capital profitsavailable for tax-free distribution. Afinal dividend on ordinary shares of3.5% amounting to $595,000 payablefrom capital profits available for tax-free distribution is recommended.During the year dividends amountingto $1 10,000 were Paid on theCompany's 1,000,000 5%%preference shares of $2 each.@ DirectorateThere were no changes in full Boardmembership during the year.However, Sir Reginald Smythenominated Mr W. J. Sandman as hisalternate in place of Mr D. O. Walker.Mr Sandman also acts as alternatefor Mr R. A. Owens.Mr Walker, who was recentlyappointed Joint Managing Director ofNew Zealand Forest Products Limited,and becomes Chief Executive early in1979, made a notable contribution tothe Union Company's progressduring his six years of closeinvolvement.@ AuditorsUnder the provisions of theCompanies Act 1955, the Company'sauditors, Wilkinson Wilberfoss, willcontinue in office.M.StnffShipping is a \"round the clock\"business which calls for dedicationfrom members of staff. The directorsare aware of the loyalty of theCompany's employees which theyhave amply demonstrated throughouta difficult trading year and recordtheir appreciation of the contributionmade by staff.Under a long service award scheme;introduced during the year, 161members of staff who have servedthe Company tor 25 years or morereceived awards.@ Future hospectsThe prospects of the Company areinevitably linked closely with theeconomic well-being of Australia andNew Zealand - the markets whichthe Company primarily serves.The Company's main task in theforthcoming year is to promote newtrade across the Tasman and wherenecessary to rationalise its f leet topresent-day trad i ng opportun ities.The main opportunity for tradegrowth lies in the development oftrans-shipment services for NewZealand shippers at Australian ports,Through trans-shipment UnionCompany can provide a link to'worldwide markets for both NewZealand importers and exporters andthis opportunity is being developed.For the directorsE. H. P. Abeles, ChairmanR. H. Smythe KBE, Deputy ChairmanWELLINGTON22nd September 1978\"lSO boxes are becoming increasingly popular with shippers.\"3

lU Compry Operations@ MAfitime the Austratian maintand to TasmaniaThe introduction into service ofUNION ROTOITI and the return toowners of the three Camit classships, UNION NEW ZEALAND,UNION AUSTRALIA and UNIONTRANS TASMAN completed themodernisation of the trans-Tasmanfleet. All cargoes except bulk linesare now carried by roll-on vessels,providing substantial a increase incargo potential. Tonnages presentlyoffering fall well short of the amountrequired to obtain lull benefit from thenew fleet's capabilities.Our service to Adelaide has beenoperated by direct vessel at monthlyintervals. With some downturn incargoes, it was found that a morefrequent service to shippers could beprovided by trans-shipment ofAdelaide cargoes at Melbourne andthis was introduced. A projected newdirect service to Brisbane waspostponed pending better marketconditions and cargo continues tomove with trans-shipment at Sydney.The surplus capacity in the trans-Tasman fleet enabled scheduling ofUNION ROTORUA and UNIONROTOITI to be varied to improveoverall operating results by reducingbunker and port charges. The newtimetables provided a two weeklycargo clearance at all ports.We re-entered theWel lington/Lyttelton service at theend of January following thewithdrawal of the New ZealandThe New Zealand and AustralianShipping Corporation's COASTAL Governments promoted trade acrossRANGER. The service is provided by the Tasman through extending theUNION HOBART and UNION period of the New Zealand AustraliaLYTTELTON as an extension of their Free Trade Agreement. The recenttrans-Tasman voyages. Threenorthbound and four southboundtrade (the Seaway Service). Thesemodern vessels are providing aregular and reliable service and aresecuring good cargo volumes. Theoperating benefits of the Seawayvessels continue to fully justify theiradvanced design.A major improvement in the servicebetween New Zealand and thePacific lslands was introduced byplacing the vessel MARAMA into thetrade replacing the smaller UNIONSOUTH PACIFIC which waswithdrawn and returned to owners.MARAMA was modified to provide aunitized service without sophisticatedshore facilities but with greater speedand cargo capacity. The work offitting a stern ramp to facilitateworking lsland ports, and theintroduction of the new vessel intothe trade, proceeded very smoothlyand the new service is providingimproved usage of our existing stockof seafreighter units as well ashandling ISO containers.Roll on/roll off vessels carried anincreasing proportion of NewZealand coastal trade. Two of theCompany's older coastal tradingconventional vessels, KAREPO andTOTARA, lacked employment andwere offered for sale.@ Marketingtrend to increased exports toAustralia was continued. ExportsThrough the provision of its exportingand marketing knowledge, theCompany believes that it has been amost effective agent for promotingtrans-Tasman trade. New exporters,in particular, are assisted by theCompany's expertise.The introduction of MARAMA intothePacific lslands trade was precededby a promotion drive to familiariseshippers with our seafreightermodule and to develop the newservice. A high proportion ol thetrade was immediately attracted andincreasing cargoes were offered witheach voyage. For the first time inmany years, contracts were obtainedfor the carriage of phosphate fromNauru, providing employment for thebulk carrier UNION AUCKLANDwhich has suffered from loss ofgypsum cargoes.Cargo volumes in the renewedWellington/Lyttelton trade have beenabove expectations. The serviceremains a vital link between the Northand South lslands of New Zealandgiving shippers an alternativetransport route.The fast and regular service providedby the SEAWAY VESSELS attractedstrong support from Australianshippers while cargoes wereincreased by trans-shipment atMelbourne of goods from NewZealand to Tasmania which hadformerly been shipped direct.During the year our Australianagents, Union-Bulkships Limited,expanded their marketing staff inorder to attract new business.On the New Zealand coast, strongrail competition and depresseda demand resulted in inadequatetonnages in the Onehunga/Nelsontrade. The carriage of coastal coalcargoes from Westport to Portland,and the movement of Auckland andTauranga bulk wheat imports, wereput out to tender for the first time,and Union Company secured bothcontracts against strong competition.sailings take place each fortnight from Australia, also continuing theproviding sufficient capacity to allow recent pattern, declined.for further growth in the trade. Marketing staff responded by givingSEAWAY PRINCE and SEAWAY every assistance in promoting thePRINCESS, the Company's first gas trade of existing shippers and byturbine powered ships, continued in locating potential new exporters.\"Union Company's trans-Tasman link provides a fast efficient serviceto export markets for Australian and New Zealand shippers.\"

lU SteaedoringAlthough trading in verya competitive climate, the StevedoringDivision had a most successful yearincreasing both turnover andprofitability. With national coverageof ports, and being well establishedin the business, outside ship andcargo owners regularly approach thedivision for quotations. The divisionmainly serves non-liner companiesand has therefore been little affectedby the transfer of cargo to containerseryrces.A significant increase in efficiencyhas been achieved throughrationalisation of operationsparticularly gear stores. The largergear stores have been expanded andnow provide maintenance servicesboth to other ports and divisions.It is hoped that the new New ZealandStevedoring Employers' Associationwill promote improved co-operationbetween stevedoring companies. TheCompany therefore plays a full role inthis organisation.Waterfront unions have becomefurther involved in stevedoringcompanies. This has resulted in theloss of some stevedoring contracts inLyttelton.Our stevedoring activities in thePacific lslands have been expandedat Apia and Nuku'alofa and these twobranches make a worthwhilecontribution to profits.lU $s6ssrgo TbrminalsThe Company's terminals in Australiaand New Zealand load and dischargethe roll on/roll off fleet. These haveprovided efficient shore facilities forhandling substantial cargoa throughput frequently at high peaks,and have been a major contributionto the efficiency of the roll-on service.The Company acquired eight forkliftsfor terminal operations to improveship operating efficiency throughbetter cargo handling and to givebetter customer service. Side frameattachments were provided for eachnew forklift to allow the increasingflow of ISO containers to be handled.The proposed terminal extension atMelbourne, with provision of a bowramp facility, has been deferredpending better cargo volumes.Following ayear of difficulties theLyttelton terminal developmentprogramme is nearing completion.There is still some development worktaking place at Mount Maunganuiand this too should be completedshortly. Greater efficiency should beachieved at both these terminals oncompletion.Lu AgenciesFeatures of the year's operations arean increase in outside business anda reduction in operating costs.Decline in Union Company freights,however, led to overall low turnoverand profits.Tasman Pulp and Paper Companyappointed Union Company managingagent for its two forest productcarriers and work at our MountMaunganui branch has increasedsubstantially through thisappointment.Union Company already managesfour coastal tankers for the NewZealand OilConsortium and duringthe year was involved in thewithdrawal of the tankerATHELVISCOUNT and itssubsequent replacement byAMOKURA. Management work andmaritime operational duties foroutside owners now providessignificant remunerative work for theCompany.New Plymouth branch continued itsstrong association with the offshoreoil/gas industry. The Company isproviding port agency services andassisting with New Zealand manningfor the PACIFIC INSTALLER, thenew support ship introduced by ShellBP and Todd OilServices Limited.Nelson branch had a successful fruitseason providing agency services forshipping lines holding Apple andPear Board contracts.ln the Pacific lslands, Apia andNuku'alofa branches have beenappointed port agents for the PacificForum Line, whilst in Tonga theCompany will also carry out theduties of general agents. We areparticularly pleased to be associatedwith this new line. All Pacific lslandbranches, and particularly Suva andLautoka, have a strong involvementwith passenger lines for which shoreprogrammes are organised. Recentlythese shore services have beenextended at Apia for Russian cruiseliners.lU En.qineeringWorksEopsThis division entered a major newdevelopment through joint a venturewith Whangarei EngineeringCompany Limited and Anchor-Dorman Limited, a Union Companysubsidiary, to build fishing vessels.The vessels will be built at Anchor-Dorman facilities in Nelson withWhangarei Engineering Companyproviding the required expertise. Thejoint venture has already gained itsfirst order for fishing a vessel with acontract price in excess of$1,500,000.Our Wellington workshops weresuccessfully relocated from EvansBay to new and more efficientpremises in Tory Street.Generally, workshops had asuccessful year. A majorundertaking, successful ly completed,was the construction of stern a rampfor MARAMA which enables the shipto act as a self-sustaining unit in thePacific lslands.@ PropertiesDuring the financial year the PropertyDepartment has been reorganisedand strengthened.A major renovation of the HeadOffice building is nearing completion.5iiJ

More than one-third of the floor areaformerly occupied by Head Officestaff has been freed for rental andtenants are now being sought.Several buildings at Evans Bayvacated by Wellington workshopshave been let to tenants and someolder bui ldings demolished.ln further rationalisation a ofproperties the Hobart office has beensold.common organisation. Theanticipated benefits have not yetresulted largely because fallingcargoes necessarily produced someindustrial strain.As a result of continuing endeavourstowards improved industrial relations,it is believed that a better degree ofunderstanding between maritimeorganisations and the Company isbeing achieved.@Union TiauellU Personnelln declining a market, TravelDepartment had a remarkablysuccessful year improvingprofitability and consolidating itsposition as leader in the travel marketof the South West Pacific. Australianoperations and the London officealso performed well.This has been a significantachievement at time when a there hasbeen a substantial decline in travel,both business and holiday.Development plans for the yearahead include the opening ofrepresentative offices in Singapore,Bali, Pago Pago and Los Angeles,with additional retail locationsplanned for Dunedin and Auckland.Union Travel is well placed to obtainbenefit from any upturn in the travelindustry.lU IndustrialEarly in the financial year,Government introduced a substantialeasing of wage restraints, whilstretaining provision for continuation ofGeneralWage Orders and limitingwage adjustments to an annual basis.The overall effect will be to providegreater f lexibility in wagenegotiations where Maritime andWaterfront award agreements haverecently tended to follow a pattern ofearlier \"trend-setting\" industryagreements.The new Waterfront lndustry Act waspassed with the intention of bringingtogether all waterfront labour into a\"Transhipment services at Australian ports enable New Zealand tosell throughout the world.\"With increasing efficiency overallstaff numbers have been reduced butmarketing and sales staff werestrengthened in key areas. Specialattention was again given to thetraining of all levels of staff inmanagerial skills, and to this end, aseries of in-house residential courseswas provided. Staff welcomed thesecourses and we believe they haveresulted in better staff involvementand performance coupled with avaluable staff relations benefit. TheDirectors' approval for a new systemfor recognising long and continuousservice with the Company wasenthusiastical ly received.To further improve communicationand family involvement, speciala report to staff was mailed to thehome address of each staff memberalong with a copy of the AnnualReport.The Company has agarn enjoyed ayear of low staff turnover.U Data ProcessingEDP facilities were introduced into allNew Zealand seacargo terminals tocontrol equipment movements andaccelerate the production of freightmanifests and customer invoices. Apilot study is presently under way toextend the system to Australianterminals.\"Constant liaison is undertakenwith customers.\"6

lW The Company's ServiceR. A. Graham Limited\"Our Export Markets would be lost without a frequentshipping service to Australia.\"Mrs Ber-vl M. GrahamDirectorGriffin and Sons Limited\"Reliability of trans-Tasnnan service is essential tothe efficient production and marketing of Grilfin'sproducts.\"Mr AIan CoffeyExport ManagerAustralian Newsprint Mills Limited\"What we ship today is printed tomorrow.\"Ford Motor Company of Australia Limited\"With the availability of a wide range of equipmentthe Union Steam Ship Co. is able to offer shlppersaccess to the most economic transport unit for theTrans-Tasman trade.\"Mr Vic SidebothamCustoms and lnternational Traffic Manager@* I7

lU Auditors'ReportWlkinson WlberfossCHARTERED ACCOUNTANTSThe MembersUnion Steam Ship Company of New Zealand LimitedWe have obtained all the information and explanations wehave required. In our opinion proper books of account havebeen kept by the company so far as appears from ourexamination of those books.In our opinion according to the best of our informationand the explanations given to us and as shown by the saidbooks, the financial statements on pages 9 to L4 areproperly drawn up so as to give a true and fair view of thestate of the company's affairs as at 30 June 1978 and ofthe resul-ts of its business for the year ended on that date.We have also examined the annexed group financi-alstatements on pages 9 t'o 14 with the audited financialstatements of the companies dealt with thereby. In ouropinion the group financial statemenLs have been preparedin accordance wj-th the provisions of the Companies Act,1955 so as to give a true and fair view of the state ofaffairs and the results of the business of the company andits subsidiaries dealt with thereby so far as concernsmembers of the company.According to such information and explanations, thefinancial statements and the Eroup financial statementsgive the information required by the Act in the manner sorequired.?trM{/Wellington, NZ22 August l97BI

_TlU Consolidated Statement ofProfit and LossUNION STEAM SHIP COMPANY OF NEW ZEALANO LIMITED AND SUBSIDIARY COMPANIESFOR YEAR ENDED 30 JUNE 1978I{otesParentConsolidatedIncomeTrading operationslnvestments1978$122,961,0971,727,7741977$128,223,084651,7781978$124,549,409530,7371977$132,501,457624,763124,688,871 128,974,962 125,090,146 133,126,220ExpenditureDeduct:General operating expenseslnterest on fixed term loansDepreciation of fixed assetsDirectors'feesAuditors' remuneration107,714,1974,633,0997,959,55450,00068,000108,752,1723,124,4664,715,88435,00071,O17108,675,6354,643,7749,094,00050,36276,9211 12,656,3203,124,4664,839,40435,35777,364120,424,849 116,699,539 121,530,592 120,732,911Il/et Profit before income tax4,264,022 12,176,3233,549,554 12,393,3091,723,332 3,871,7416,751 1,224349,856 409,681Deduct:Taxationlnterest of minority shareholdersAdd:Share of retained tax paid profit ofassociated company341,532,098 3,940,371Il/et profit after income tax2,731,9249,603,97246,2941,117,8578,235,952 2,169,327 9,930,0259,477,643 10,509,880 9,6g9,47g511,031 46,294 511,0311,117,957Add:Unappropriated balance from prior yearsTransfer from revaluation reserveTransfer from capital reserveAvai lable for appropriationDeduct:Transfer to capital reserveDividends paid and proposedOrdinaryPreference13,500,0471,020,000110,00018,224,6266,938,1541,572,5001 10,00013,843,35822,5211,020,000110,00019,130,5346,938,1541,572,5001 10,000UnapprEpriated prortttcarnedlorruard6 $12,370,047 $9,603,972 $12,690,837 $10,509,880The notes on pages 12lo 14 form part of the accounts and should be read in conjunction therewith.s

lU Consolidated Balance SheetuNtoN srEAM sHtp coMpANy oF NEwZEALAND LrMrrED AND suBslorlRv cotuplNrtl.gAs At 30 June 1978I{otesParentConsolidatedLiabilities1978$3,324,950t 3,02t,39+10,029,3061,176,342650,0002,739,2901,452,6041977$2,406,6343,927,89211,267,05011,320,734850,716777,5003,950,2091,717 ,285197 Bs3,418,030'lg,gzqJi10,029,3061,273,479650,000t,qs3,69o1977$2,677,7553,927,8921 '1 ,953,13111,320,734914,8'14777,500t,zlt,zasand S hareholders' FundsCurrent Liabilities:Bank overdraft (secured)Short term loansCreditors and accrued expensesCurrent portion of term liabilitiesProvision for taxationProvision for dividendAmounts due to subsidiary companiesAmounts due to associated companyTotal Current LiabilitiesTerm LiabilitiesDeferred TaxationShareholders' Funds:Authorised capital-23,000,000 Ordinary shares of $1 per share1,000,000 Preference shares of $2 per sharelssued capital-17,000,000 Ordinary shares of $1 fully paid1,000,000 Preference shares of $2 fully paidCapital reserveNet surplus on consolidationAsset revaluation reserveU nappropriated prof itsTotal Shareholders' Fundslnterest of Minority ShareholdersContingent Liabilities and CapitalCommitments32,443,79643,739,8664,117,03336,218,02050,495,0383,110,95230,748,61643,838,1914,022,10233,289,11150,600,0713,027,31189617,000,0002,000,00011,471,588961,61512,370,04717,000,0002,000,00012,589,4451,007,9099,603,97217,000,0002,000,00011,984,8191,993,0741,076,27712,690,83717,000,0002,000,00013,080,'1551,993,0741,122,57110,509,88043,803,250 42,201,32646,745,007 45,705,68021,419 10,667$124,103,935 $1 32,025,336 $125,375,335 $132,632,84013t0

I{otesParentConsolidatedAssetsCurrent Assets:Cash at bank, on hand and depositsAccounts receivablePrepaymentsStocks - fuel and storesAmount owing by related companiesAmount owing by parent companyAmount owing by subsidiary companiesTotal Current AssetslnvestmentsFixed Assets:FleetFreehold and leasehold propertiesPlant and equipmentNet Fixed Assets1978$2,986,82412,975,2373,239,6741,983,604642,681201,311253,9201977$2,239,88212,144,0843,406,8202,031,907522,874248,811101 ,8551978$1977.)2,281,24312,972,3253,406,8202,367,0461,368,851248,811103,155,89113,831,9993,257,9542,g02,gog1,247,426201,31151122,283,2514,901,29985,623,5234,607,8316,689,03220,696,2335,129,05195,465,1934,025,6296,709,23024,497,4692,513,98485,732,4245,641,4196,990,04022,645,0962,459,02095,612,3095,041,2236,875,19396,919,386 106,200,052 99,363,992 107,529,724$124,103,935 $1 32,025,336$125,375,335 $,1 32,632,940For and on behalf of the BoardReginald H. Smythe, KBEDeputy Chairman of DirectorsJ. B. HorrocksDirectorThc notes on pages 12 to tr 4 form part of the aceounts and should be read in conjunetion therewith.

lU Notes to Financial StatementsAS AT 30 JUNE 1978Note 1 : Statement ofAccounting PoliciesGeneral Accounting PoliciesThe general accounting principles recognised as appropriate for the measurement and reporting of profit andfinancial position on an historical cost basis have been followed by the company in the preparation of theseaccounts except that land, freehold and leasehold property are at valuation.Particular Accounting PoliciesThe following particular accounting policies have been applied:Consolidation of AccountsThe consolidated financial statements incorporate the accounts of the holding company and all subsidiarycompanies. All significant inter-company transactions have been eliminated on consolidation. Significantsubsidiary companies are:Anchor Dorman LimitedPacific and World Travel LimitedUnion Citco LimitedThe interest in an associated company has been accounted for by the equity accounting method, viz UnionBulkships Proprietary Limited - 50%.Valuation of AssetsFleet, at cost less accumulated depreciation and ships under construction at cost. Cost includes realised andunrealised currency exchange fluctuations on ship loan finance, interest charges in the case of ships underconstruction and delivery costs of company-owned ships. Cost also includes modifications carried out tochartered ships. Land, at market valuation at March '1975 as determined by independent registered valuers.Freehold and leasehold buildings, at market valuation at March 1975 as determined by independentregistered valuers, plus additions at cost, less accumulated depreciation. Plant and equipment, at cost lessaccumulated depreciation. lnvestments, at the lower of cost or market value. Stocks - fuel and stores, at thelower of cost or market value.Depreciation of Fixed AssetsFleet, less residual value, from the time of entering service, on a straight line basis over estimated useful life.The estimated useful life of rollon rolloff ships is 15 years and for conventional ships 20 years. Modificationcosts for chartered ships, on straight a line basis over the terms of the charters. Land is not depreciated.Buildings, on a straight line basis over estimated useful life of 20 to 62 years. Plant and equipment, on astraight line basis over estimated life of 7 to 10 years.Chartered ShipsThe company charters ships from various owners. There is normally a delivery voyage to New Zealand at thecommencement of the charter and a redelivery voyage at the conclusion of the charter. The actual deliverycosts are amortised over the term of the charter. A provision for redelivery costs is made over the sameperiod.Foreign CurrenciesAccounts of foreign subsidiaries and balance sheet items of the company and its New Zealand subsidiariesdenominated in foreign currencies are translated at the rates of exchange ruling at balance date.lncome Recognitionlncome from ships trading is accounted for on a completed voyage basis.Sale ol ShipsThe net surplus or deficit on sale of ships associated with changes in the fleet is recorded under tradingoperations. Where a ship remains with the fleet but is sold and leased back the net surplus or deficit ondisposal is treated as an extraordinary item.TaxationTaxation currently payable has been calculated after allowing for non-taxable income and non-deductibleexpenses. Deferred taxation is the net amount of accumulated tax credits and charges resulting from timingdifferences between depreciation and other expenses charged for financial reporting purposes anddepreciation and other expenses deducted for income tax purposes. The calculation of deferred taxationincludes, the tax effect of losses for income tax purposes which will not be realised until the company derivestaxable income in future years. The net deferred taxation credit is carried forward to future years when it willreduce income ta4 charges in statements of profits as timing differences result in taxable income exceedingaccounting profits.Changes ln Accounting PoliciesThere have been no material changes in accounting policies during the year.t2

I{ote 2: Inuestment IncomeGovernment securitiesDividends from companiesOther investment incomeI{ote 3: TaxationThe prima facie taxation payable on the pre-tax accounting profit of$4,264,022 (Group - $3,549,554) is reconciled to the income tax chargeprovided in the accounts as follows:Tax calculated at 45 cents in the dollarFrom which is deducted the tax effect of:Nontaxable income arising from dividends receivedOther non-taxable income, net of non tax-deductible expenses andadditional deductions for income tax purposes in respect of losses onrepayments of overseas loansTo which is added tax currently payable in overseas countriesI{ote 4: Interest of Minlrit} SltareholdersSubsidiary companies in which Union Steam Ship Company of New Zealand Limited does not own the ordinary capital are:Union Citco Limited (51% owned)New Zealand Offshore Services (60% owned)Note 5: InuestmentsAt 30 June 1978 investments comprised:I nvestments in subsidiariesGovernment securitiesShares in companiesOther investmentsInvestment in associated company at costShare of profit before taxation $562,081 less share of taxation $212,225Share of retained earnings carried forwardParent2261,204,788522,760$1,727,7741 ,918,810542,155494,557882,098650,000u'o_T$4,901,2995,000764,537$1 ,532,098 $1,723,332100% ol3,158,5216,173 6,17396,4'r6 108,0861,635,188 1,635,188$4,896,298 $1 ,749,447Note 6: unappropriated Profits Carried FonlardParent companySubsidiary companiesAssociated companyI{ote 7: Term LiabilitiesSecured loansUnsecured deferred creditorsLong term portion '1973 taxLess current portion12,370,047 12,370,047(438,747)759.537$1237A,047 $12,690,83751,105,238 51,116,6372,435,398 2,501,206228,536 249,65453,769,172 53,867,49710,029,306 10,029,306$43,739,866 $43,838,191Group2266,045524,466$530,7371 ,597,2992,720595,528999,051724,2815,000349,856409,681$2,513,984

It{ote B :Capital ReseraeBalance at beginning of yearPlus capital profit in subsidiary companyLess: Adjustment for capital loss on disposition of propertyTax free dividendParentGroup12,589 ,445 1 3,080,1 5522,52112,589,445 13,102,67697,857 97,8571,020,000 1,020,000$1 1 ,471 ,588 $1 1 ,984,819I{ote 9: Asset Reaaluation ResenteBalance at beginning of yearLess amount realised on properties sold1,007,90946,2941,122,57146,294$961 ,615$1,076,277I{ote 10: Accounts ReceiuableTrade debtorsNon-trade debtors11 ,233,841 12,090,5921,741,396 1 ,741,396I{ote 11: Fixed Assets'y *rf1i3101,205,280 102,405,67215,581,757 16,673,249FleetLess depreciationNet book valueLandPlus revaluationFreehold and leasehold propertiesPlus revaluationPlus property redevelopmentLess depreciationNet book valuePlant and equipmentLess depreciationNet book valueNet fixed assets85,623,523 85,732,424269,782676,718269,782676,718946,5002,491,7702,309,799267,375946,5003,164,3222,906,045267,3756,015,4441,407,6137,284,2421,642,8244,607,8315,641 ,41815,700,522 16,425,5729,012,490 9,435,5326,688,0326,990,040$96,919,386 $98,363,882I{ote 12: Charter Hireln addition to owning ships, the company also charters ships from various owners. Charter hire is payable invarious currencies. The estimated liability of the company for charter hire in lhe 1978179 financial year withforeign currencies converted to New Zealand dollars at exchange rates applying at 30 June 1978 is$13,800,000 (30 June 1977 $17,600,000).I{ote 13: Contingent Liabilities and Capital CommitmentsAt 30 June 1978 the liabilities under guarantee and other contingencies were estimated atCommitments for capital expenditure amounted to approximately$870,000$2,761,000l4

rIluFinancial RecordsUNION STEAi' SHIP COMPANY OF NEW ZEALAND LIMITED ANO SUBSIDIARY COMPANIESPERIODS ENDED 30 JUNEStat ement of hofit it ems : ( $ OOOITurnoverTrading costsProfit from trading before depreciationDepreciationProfit before income tax and extraordinaryitemsExtraordinary itemsNet profit before income taxlncome taxNet profit after extraordinary itemslnterest of minority shareholdersNet share of profit in associated companyNet profit after income taxTax paid profit as percentage ofshareholders' fundsFive year averageTax paid profit as percentage of revenueFive year averageTax paid profit per $1 ordinary share(capitalwas increased in April 1975)Dividends paid $'000FleetPlant and equipmentFreehold and leasehold propertiesCurrent assets and investmentsDeduct:Current liabilitiesLong term liabilitiesDeferred taxationFunds, being issued capital and reservesThese funds were provided by:Minority shareholders of subsidiariesGroup shareholdersPaid up share capitalReservesLong term loans as percentage of issued capitaland reserves plus long term loansTonnes shipped per ship trading dayAverage age of fleet in yearsN umber permanent employees1978s125,080113,4471977 1976 1975$133,126115,894$97,29591,214$82,06574,3951974$79,16974,00611 ,6338,08417,2324,8396,0815,2227,6703,8805,1633,7413,54912,3938593,8903,7904111,4221,0103,5491,72312,3933,8724,7492794,2011,0292,4321841,826(713508,521(1)4104,470I3,172(4)2,248(2)2,1698,9304,4673,1682,2464.6o/\"10.60lo1.7o/o3.9o/o13c1,13019.5Y\"6.7o/\"11.6%4.6o/\"8.97o3.9o/\"'19c9378.SYo2.8Y\"19c92053c1,68226c535Statement of Financial Position items: ($OOO185,7326,9905,64295,6136,8755,04178,3767,1285,72850,721 32,9185,660 3,6616,151 4,12898,36427,011107,52924,42891,23226,62762,532 40,70716,374 14,677125,37530,74943,8384,O2246,766131,95732,61350,6003,0271 17,85924,82555,461(8e4)78,906 55,38421,134 15,57523,733 13,400(ee8)45,71738,46735,037 26,4092119,00027,7451119,00026,746919,00019,4586319,000 14,00016,031 12,40646,76645,71738,46735,03726,40948.4o/o4846.41,56452.5%3745.21,57359.1%3055.61,62740.40/\" 29.5o/\"234 2876.1 9.81,907 1,919l5

lU FinancialRecordsUNION STEAM SHIP COMPANY OF NEWZEALAND L!MITEDAND SUBSIDIARY COMPANIESPERIODS ENDED 30 JUNE$150,000$120,000$90,000$60,000$30,000$0Titrnouer ($OA1$10,000$8,000$6,000$4,000$2,000$01975 19741978 1977 1976 1975 19747.0%5.6%4.2%2.87\"1.4%AO/v/oreuenue$s0,000$40,000ffio,000$20,000$10,000$01978 1977 1976 1975 19741978 1977 1976 1975 1974207\"167\"12%B%4%0%$150,000$120,000$90,000$60,000$30,000$0($ooolSltmeholdas($ooo11978 1977 976 975 1 1 1974t6

lU Union Compary Contribution toNew ZealandTiadeLn Union Company Contribution toAustralian tadeAUSTRALIA5652m (22ol\")Union carried 456m t5%)( OTHER$357m(12Vo)OTHERS5623m (20olo)AUSTRALIA$388m (120l\")ljnion carriedS3lotit (10Y0)JAPANS430m (14ol\")JAPAN$2093m (19o/o)S821 m (7Y\")

L]rFleetList\"lU Executive.Cargo Vesselsg.t.e.v. Union Rotoruag.t.e.v. Union Rotoitig.t.e.v. Seaway Princeg,t.e.v. Seaway Princessm.v. Union Hobart*m.v. Union Lyttelton-m.v. Union Melbourne.m.v. Marama*m.v. Union Auckland.m.v. Ngaherem.v. Ngakutam.v. Ngaparam.v. Karetum.v. Titokim.v. HolmdaleDeadweightTonnes14,40014,4004,2164,2207,3507,3507,0006,45220,1166,1166,0766,1473,7089141,094B. S. Cole GeneralManagerD. C. Jury Assistant General ManagerA. Notley Assistant General Manager (Finance)P. E. Maxwell Company SecretaryD. A. Graham Manager - BranchesV. L. Kilgour Fleet ManagerK. G. Keech General Manager- Union TravelD. C. Shelton Corporate Planning ManagerR. J. Ross lndustrial ManagerG. R. Peebles Personnel ManagerA. McNab GeneralTraffic ManagerP. R. Romanos Marketing ManagerW. R. Holdsworth Accounting ManagerS. D. Judson EconomistM. C. Radford Finance ManagerAUSTRALIAE. L. ChesterOperations ManagerLegendg.t.e.v.m.v.*:Gas turbine electric vesselMotor vesselCharteredUNITED KINGDOMP. E. HewettLondon Representative\"Traditional customers remain with Union Company.\"t8

UOfficesHead OfficeWELLINGTON36-48 Customhouse Quay,P.O. Box 1799.New Zealand Branchesand TravelOfficesAUCKLAND3&38 Quay Street,P.O. Box 12.TravelOffice,164 Queen Street.BLENHEIM63 High Street,P.O. Box 24.BLUFFHarbour Board Bui lding,lsland Harbour,P.O. Box 94.CHRISTCHURCHCnr Armagh and Colombo Streets,P.O. Box 2090.DUNEDIN38 Water Street, C.1,P.O. Box 650.HAMILTONQryant Trust Building,Cnr Collingwood and Barton Streets,P.O. Box 486.HASTINGS218 Heretaunga Street West,P.O. Box 1146.INVERCARGILL39 Tay Street,P.O. Box 3.LEVIN280 Oxford Street,P.O. Box 266.LOWER HUTTBank of New Zealand Building,185 High Street,P.O. Box 30-130.LYTTELTONPort Building,Norwich Quay,P.O. Box 3.MOUNT MAUNGANUICnrTasman Quay and Hull Road,Mount Maunganui South,P.O. Box 4.120.NAPIERHawke's Bay Motor Co. Ltd.Building,Dickens Street,P.O. Box 641.NELSONAnchor Dorman Ltd.,Port Nelson,PO. Box 5007.NEW PLYMOUTH40 Devon Street East,P.O. Box 545.OAMARU6'l Thames Street,P.O. Box 4'1.PALMERSTON NORTH1 54 Broadway Avenue,P.O, Box 1 12.PORIRUAEvening Post Building,Cobham Court,P.O. Box 50-074.TAURANGA6$67 Devonport Road,P.O. Box 640.TIMARU257 Stafford Street,P.O. Box 185.WELLINGTON36-48 Customhouse Quay,PO. Box 1799.TravelOffice,70 Manners Street.WESTPORT10 Wakefield Street,P.O. Box 246.WHANGAREI1st Floor,N.Z.l. Building,28 James Street,P.O. Box 749.Pacific lsland BranchessuvA, FijiThompson Street,P.O. Box 43.LAUTOKA, FijiVitogo Parade,P.O. Box 49.APIA, Western SamoaSavalalo Buildings,Main Beach Road,P.O. Box 50.NUKUALOFA, TongaTungi Arcade,Main Street,P.O. Box 4.PAGO PAGO, AmericanSamoaB.F. Kneubuhl lnc. (Agent),Kneubuhl Maritime,P.O. Box CB39.Agents, AustraliaUnion-Bulkships Pty. Ltd.,Head Ofiice,TNT Place,Tower 1,Lawson Square,Redfern,Sydney,G.P.O Box M90, 2012.HOBARTUnion-Bulkships Pty. Ltd.,Colonial House,57 Salamanca Road,G.P.O. Box 1623K, 7000.MELBOURNEUnion-Bulkships Pty. Ltd.,94 William Street,G.P.O. Box 12751,3001.TravelOffice,Union Travel,94 William Street.SYDNEYUnion-Bulkships Pty. Ltd.,339 George Street,G.P.O. Box 534, 2001.Travel Office,Union Travel,17th Floor,CapitalCentre,255 Pitt Street.PORT ADELAIDEUnion-Bulkships Pty. Ltd.,St. Vincent Chambers,259 St. Vincent Street,P.O. Box 162,5015.FREMANTLEUnion-Bulkships Pty. Ltd.,17 Henry Street,P.O. Box 434, 6160.BRISBANEUnion-Bulkships Pty. Ltd.,Pearl Assurance House,379-391 Queen Street,P.O. Box 2205:4001.United KingdomC/- Mcllwraith McEacharn Ltd.,Stevinson House,'155 Fenchurch Street,London EC3M 6AU.TravelOffice,Pacific and World Travel Ltd.,8-10 Royal Opera Arcade,Pall Mall,London SW1 4UY.t9



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