The company has not thought it prudent to pay a larger dividend than 8 per cent. per annum to the shareholders.
In addition to the dividend, the before-mentioned reserved funds have accrued from the annual profits, viz.:—
| Depreciation | £175,183 |
| Insurance | 137,162 |
| Repairing | 74,079 |
| ———— | |
| £386,424 | |
| ———— |
Beyond 2½ per cent. on the freight and passage-money, paid to the directors under the head of management; and 5 per cent. on the profit balance on closing the account, paid on the same account.
These charges of 2½ per cent. on the freight and passage-money, and 5 per cent. on the balance, include, beyond all other expenses of management, allowance to the managing directors, for conducting the affairs of the company, to the net amount of from £15,000 to 16,000 per annum.
This remuneration is paid to them under the deed of settlement, and has probably secured to the shareholders an efficiency and economy in the general arrangements which have contributed greatly to the success of the concern; at the same time it may be doubted whether, in estimating the profits of the company, the amount paid to the directors may not be considered (beyond the usual compensation for such services) as part of the general profits, rather than as a charge of management.
The principles on which the reserved funds have been laid aside appear fair and reasonable.
The insurance is at a rate of 5 per cent. on the first cost of the vessels employed, after deducting the amount already carried to depreciation account; out of which amount the premiums for insurance at Lloyd’s are paid on such assurances as are effected there, the balance being added to the insurance fund. The portion of the insurance actually effected is at rather a higher rate than the 5 per cent. It would not be fair, therefore, to include any portion of this reserved fund in an estimate of the company’s profits as shipowners or mail contractors. It belongs fairly to them in their character of insurers, as, if they had insured the full value of their property, it would have been paid to underwriters.
The depreciation fund is calculated at a rate of 5 per cent. per annum on the first cost of the vessels, after deducting the amount previously carried to the same account.
The repair fund is at the rate of 10 per cent. per annum, calculated on the same amount as the preceding; and it will be seen that the sum thus reserved for the last six months was £37,633 13s. 3d., which did not provide for the actual expenditure of £39,630 6s. 3d.