THE ECONOMIC WEEKLY May 21, 1955 The "Shell" Transport and Trading Company, Ltd. Greater Operational Activity Results in Increased Sales Volume Heavy Capital Expenditure Inescapable Substantially Enlarged World Consumption Sir Frederick Godber's views on Oil Prices HE Annual General Meeting of through the capitalization of part of ber, was widely appreciated and T The " Shell " Transport and the company's share premiums re­ favourably commented upon, as Trading Company, Limited, will be serve. affording an opportunity of following held on June 1 at The Chartered In­ more closely the current trading When commenting on this issue surance Institute, 20, Aldermanbury, results of the group. I am glad to in my statement last year, I said that say that this year we propose to London, E.C. one of its objects was to broaden the publish similar results on a quarterly The following is the statement by basis of the ownership of the com­ basis, and that figures for the first the Chairman, Sir Frederick Godber, pany. You may, therefore, be inter­ quarter will be available within a few which has been circulated with the ested to learn that during 1954 re­ weeks. report and accounts for the year end­ gistered Ordinary stockholders in­ ed December 31, 1954: — creased by approximately 10,000, and I will now proceed to the report in December numbered over 142,000. on the group financial results for The Board of Directors You will appreciate, of course, that 1954. Little more than a year after his the number of individuals who own THE ROYAL DUTCH/SHELL resignation from the board owing to the equity of the company must ill health, Sir Andrew Agnew, our exceed this figure by a substantial GROUP REPORT ON THE colleague for so many years, has margin, there being no record of those YEAR 1934 passed away. who prefer to be registered in the In my statement last year I paid name of nominees, or of holders of Financial Position tribute to Sir Andrew's half-century Ordinary stock in bearer warrant Net income of the group for 1954, of devoted and untiring service to form. after taxation and* elimination of your company and to the group. I minority interests, was £134,474,218, By means of such issues from time recalled, too, his outstanding work in compared with £130,415,373 in 1953, to time the shareholder has obtain­ building up the group's tanker fleet ed in concrete form acknowledg Higher activity in all phases of the into one of the world's largest and ment of the growth of the assets group's operations resulted in an in­ most efficient maritime enterprises. which his shares represent, and of the crease in the volume of sales in 1954 I feel sure you will wish to join in business in which they are used. of nearly 10 per cent in world out­ extending sympathy to Lady Agnew side North America, and of 4 per and to all the members of his family The Royal Dutch/Shell Group cent in North America. This im­ Balance-sheet and Revenue The assets of The " Shell " Trans provement was reflected in an increase Statement port and Trading Company, Limited, in group net income before taxation The financial results of the group arc substantially in the form of in­ of £23 million. The greater part of vestments in a large number of com are reported elsewhere in this state­ this increase, however, has been off­ panics known collectively as the set by higher taxation provisions, to ment. The dividends paid to the Royal Dutch/Shell Group. Your which reference is made later. As parent companies for 1954 amounted company has a 40 per cent interest a consequence of these larger tax to £26,841,299, compared with in these companies and the Royal provisions, the net income of the £22,186,010 for 1953. In consequ­ Dutch Petroleum Company a 60 group after taxation increased by ence the net revenue of your com­ per cent interest. only £4 million over the previous pany, which consists mainly of divi­ year. This is a very significant fact. dends from the group, was The greater part of these invest­ £10,527,844, against £8,670,523 in ments is held through three princi­ Out of the 1954 income, dividends 1953. pal wholly owned operating compa­ of £26,841,299 have been paid to the parent companies—Royal Dutch After deducting the Preference nies—The Anglo-Saxon Petroleum Petroleum Company and The dividends paid and accrued and the Company, Limited, N.V. De Bataaf- sche Petroleum Maatschappij, and " Shell " Transport and Trading interim Ordinary dividend of is. per The Shell Petroleum Company Li­ Company, Limited. £1 unit free of income tax, paid on mited. The managing directors of January 18, 1955, there remains each of these three companies are Sales proceeds and other income, available for distribution; including identical and at present are: The amounting in 1954 to £1,851,039,- the carry forward from 1953, an Hon. Sir Francis Hopwood, Jonkheer 043, were higher by £150,324,593 amount of £9,538,414. J II Loudon, II Bloemgarten, J W than in the previous year. The greater proportion of the more valu­ The directors now recommend a Piatt, F A C Guepin, F J Stephens, able light products achieved in 1953 final dividend of 2s, per £1 unit L Schepers. sales was maintained in 1954, in spite free of income tax which, if approv­ At last year's annual general meet­ of the fact that the higher demand ed, will be pavable on June 8, 1955, ing I mentioned that it was proposed pressed more heavily on fuel oils. and will absorb £6,541,763. to make available a figure of group Geographically the improvement was Reference has already been made income for 1954 on a half-yearly particularly pronounced in Europe, in this report to an issue during 1954 basis. The publication of these where it is attributable to the record of 10,902,939 Ordinary shares results, which was made in Septem- level of economic activity reached 607 THE ECONOMIC WEEKLY May 21, 1955 in western European countries during It must be remembered that to- It is gratifying to note the increase 1954. The increasingly high stan­ come taxes are levied on group com­ in cash and securities, which at the dard of quality of group companies' panies by fiscal authorities all over the end of 1954 together amounted to products also contributed to the im­ world, in fact by more than 50 differ­ £346 million. Against this improve­ provement, since it resulted in pub­ ent governments. In the same way ment, however, must be set very sub­ lic preference for them becoming the income of £134 million is spread stantial forward capital commitments; more marked. over an equally large number of moreover taxation liabilities have countries, and while a few of these risen to £129 million, and these In the USA sales and income of contribute a very significant propor­ must be met irrespective of the Shell Oil Company were higher, in tion, no preponderant part is attri­ course of our future generation of spite of the US oil industry's general butable to activities in any one coun­ funds. It is essential for our cash experience during 1954 of more diffi­ try. position to be strong, in order cult conditions, which were reflected Assets and Liabilities that we may be in a position in a reduction of allowable produc­ to meet requirements for funds tion of crude oil, and in one of the Turning now to the statement of in nearly every country in the smallest annual increases in consump­ assets and liabilities, you will see world, in most of which facilities for tion since the war. that some changes in presentation are raising funds are limited or negli­ made, in order that a more detailed Costs and expenses of the group gible. and clearer picture of the financial rose in total at about the same rate Capital Expenditures position may be given. Long-term as sales. Operating expenses amount­ receivables have been separated from Our capital expenditures during ed to £1,044 million in 1954, against current receivables, and a new item, 1954 were quite as high as was £977 million in 1953. In addition short-term borrowings, appears under predicted a year ago. The figures to those costs directly attributable to current liabilities. This is made up for the past four years in millions of the production, manufacturing, trans­ of bank overdrafts, short-term accom­ pounds were as shown in the table porting and marketing of oil and modation bills with banks, and long- below. chemicals, there arc other heavy term borrowings due within one year; expense connected with exploration About two-thirds of these outlays the two last items were formerly and with research, both of which in­ have been met from depreciation and included in accounts payable. In creased. In 1954 group companies other provisions, and the remainder addition, separate figures have been spent more than £50 million on from the retained earnings of the shown for cash and for short-term exploration in an intensification of group. marketable securities. the search for new oil; this, like the In the light of information avail­ expenditure on research, is a cost in­ There have again been substantial increases in property, plant, and able at present it appears probable curred to safeguard our future posi­ that the future levels of capital ex­ tion. equipment, the gross investment in which stood at £1,664 million at the penditures will, if anything, be even Depreciation, depletion and amorti­ end of 1054.