THE BRITISH ELECTRIC TRACTION COMPANY, LTD.
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The Warning of the Bus Strike Optimism for the Future Mr. H. C. Drayton's Review
The sixty-second annual general meeting of the British Electric Traction Company, Limited, was held on July 24th in London. Mr. H. C. Drayton, Chairman of the Company, in the course of his address said :— ACCOUNTS
The Group gross profit for the year is £5,244,000, an increase of £185,000 on the previous year. From this, however, has to be deducted depreciation of L1,118,000, an increase of ,£266,000 on the previous year, and this increase arises' in the main from the depreciation for a full year of the assets of the Canadian Company. After deducting Auditors' remuneration and interest charges, there is a Group profit for the year before taxation of £3,687,000, a reduction from the previous year of 4236,000. I believe the year under review is a passing phase and what might be termed a pause or resting place.
UNITED KINGDOM BUS COMPANIES Last year when I met you we were in the midst of a strike of provincial busmen, involving our various bus undertakings in this country. At that time the Minister of Labour had decided to submit the dispute to the Industrial Disputes Tribunal, and the Unions had refused to co-operate and had preferred' to call a strike. The Tribunal gave its award which
was an increase of per week on the basic rates. Although the award was binding on both parties, the Unions had indicated that they would not accept it it it did not meet with their approval. However, they called off the strike after it had run for nine days, so presumably the award was a generous one. It was the first strike experienced by the provincial bus industry on a national scale since the General Strike in 1926. It came at the most difficult time from the point Of view of thepublic—at the height of the holiday season—and Many passengers who had booked their holidays by long distance coaches had to cancel and -forego their holidays. A more permanent loss, however, is that many of our regular travellers haveadopted other means of transport, rail, their. own tars or motorbikes, and have not returned, and may never return, to bus travel.
Less than nine months after the strike, the provincial bus companies received from the Unions a further demand for a wage increase and other additional benefits, and negotiations are now taking place,'The experience of last year has sounded a serials warning to those_ engaged in the provincial bus industry. We have lost passengers as a result of the strike. We More also lost more passengers as a result of having to increase fares to meet the higher wages, and, what is more serious, we have found that traffic receipts have fallen despite the higher fares. To meet these increased costs serious cbnsideration has had to be given to our unremunerative route mileage which is approximately 40%. We have found we cannot afford to run to large a proportiois of unremunerative services.
TAXATION I have told you of the excessive tax which we have to pay on our fuel oil which amounts to 2s. 6d. per gallon used by public service vehicles.
As regards our buses ; to give you an idea of what we pay and to put our taxation into an understandable form, we have to pay 4.31d. every time one of our buses travels one mile, and I suggest that is too much for a sleeping partner to take who does little or nothing towards earning it. In the last budget there was no reduction, but what is more to the point we had further severe taxation put upon us. From the, time when statutory undertakings, including omnibus companies, were first made liable to profits tax, they have been charged at the lower rate. namely 3% on all their prafits. Now it is proposed to abolish that rate and to replaceit by a flat rate of 10% op the whole of our profits. If the Finance Bill becomes law in its present form—and there is every indication it will do so—this extra profits tax, we estimate, will cost our associated omnibus companies about £360,000 more in a full year. One begins to wonder whether we are performing any service to She public at all, or whether we are regarded as parasites and to be taxed on a penal basis with a view to eventually eliminating us. One thing stands out a mile"-see certaihly have not received any encouragement from the Treasury.
OVERSEAS INTERESTS During the year our Canadian Company increased their fleet from 1,700 vehicle units to 1,875 units. Ourinterests in Canada contirlued to do well until the Fall, when we were hit by the recession, and profits swiftly tailed off. However, this adversity enabled us to re-organise and consolidate our Canadian undertakings and work together much more quickly than if we had gone on being prosperous. As a result of their whole-hearted co-operation and working together the business was put on a sounder footing and today is working at a monthly profit. It is now four years since we started running buses in Kingston, Jamaica. When we started operations there the bus industry was in a chaotic condition, We negotiated a new franchise and we have built up
an efficient and reliable service. This entailed sinking much money in new vehicles, garages, etc., which have been profitable both to us and to the people of Kingston by the Service we provide. There have 'been three increases in wages for OW work people since we started operation, all of which cost the Company money, but which we have been able to absorb without increasing fares to the public. The Unions are now demanding a fourth increase, but it .is so large that there is no basis upon which we can negotiate. Consequently the matter will goto arbitration. We know front experience that demands for increased wages are in part of any business and we, recognising . this, accept that position. But what I must voice and bring into the open is that the increases which are awarded under arbitration in Jamaica are made retroactive. This is most unfair and any further increase in costs will mean applying for increased fares. However, we are still of the opinion that with fair treatment we have a profitable business. There is a marked shortage of skilled fitters which the company badly needs for the maintenance and the expansion of its services. Our interests in East Ali-ice—that is in Kenya, Tanganyika and Uganda—continue to make steady progress in a quiet way.
Rhodesia United Transport in which we have a big interest has had another successful year resulting in a record profit and a moderate increase in dividend. This company is ploughing back a large proportion of its profits with a view to expansion and improving its services to the public. The subsidiary company, formed to undertake the transport contract in connection with the building of the Kariba Dam, to which I referred last year, made a modest contribution to the profits. The Rhodesian Company's passenger and freight services continue to forge ahead, although we have many problems which are peculiar to that area, and one of these could be solved if the various governments through whose territories long distance services run would adopt a common code of legislation on transport matters.
I was in Rhodesia this year, where I met Mr. John Watts who is Chairman, of the Company and whose vigorous direction makes us feel satisfied with our participation and gives us confidence that the future will show inereased earning capacity.
OTHER 'INTERESTS .
During the year the confidence we placed in Associated-Rediffusion Limited, that is the independent television company, has been more than fully justified. We realised when we entered this business there would be heavy losses in the initial period of operation, though I must say they were greater than
anticipated. These losses were financed by means of temporary advances, and I am pleased to say that at the 31st March we had had substantial repayments. Since the close of the year, the company has either repaid or made arrangements to repay the balance of its indebtedness. We have a major interest in the equity in this company, and inthe current year we can look forward to receiving dividends from this souree.
REDIFFUSION In August last year Broadcast Relay Service changed its name to Rediffusion Limited. The company has again had a most successful year and has once more produced record profits.
The results of our subsidiary, Advance Laundries Ltd.. for the last year have taken a step forward and the companyhas reported a 28% increase in its Group working profit, and a useful increase in its final dividend. During the year the parent company, that is your Company, took up additional Ordinary shares to provide for the further development of the company's " Towelmaster " service. I look forward to the results for the current year ',being quite as good as those for the past year. Eddison Plant Ltd., which hires road-making and contractors' plant, was hit by the heavy reduction in work on road construction following the Suez crisis and the tightening of money, and in consequence had a somewhat less so s'essful year. .Hilisrever, there are signs of revival in this business and if the Government will recognise its obligations in this country for the need of a good' road system, we can look forward to this company building up into a, very successful business. I would like. to add the company is now busier than it was a year ago.
THE FUTURE Last year when I met you I mentioned that the Company could look forward in the following two or three years, that is this year and next, to reaping the reward from the new businesses we have entered. I see no reason to modify these remarks in any shape or form, and I would like to emphasise that in the current year I expect the income of your Company to show a substantial increase, provided there is no setback in our omnibus business in this country or a recession. The report and accounts were unanimously adopted.