Investments have been reduced! materially since the date of the last Balance Sheet by transfers to the: various fund accounts and by realiza-_ Hon to nance capital expenditure. We were enabled to do this without Joss owing to the bulk of our investment being on comparatively short form and guaranteed against capital ess. The balance which is represented by local debentures we have been able to write down to market value out of investment income. The severe decline in debenture prices i, however, reflected In_ the -difference Between' the market value and the est of the various fund investments. As against the biggest potential loss that. of some $83,000, on Staff Pro-evident Fund Investments there reserve of $31,880.06 included in Sundry Creditors and Credit Balances which has been built up in previous years from profits earned on reallzafon of the fund investments to meet withdrawals from the fund. This amount Is available to meet any losses} that "may "be Incurred on sitar While on the subject of the Balance Sheet it seems appropriate to mention that your directors have been con: sidering the form in which your! Company's accounts are presented, form which during the passage of years has not lent itself easily to] Adaptation to show clearly the state! of altairs of your undertaking. In our: opinion the form suffers from over elaboration which tends to obscure! essentials. Tt Is our intention remedy this in the accounts that wilt be submitted to you next year.
When addressing you In March of last year I said that in view of the general uncertainties of the then ancial situation your diccctore felt that it was no time for any hasty revision of the tariff of charges but that the Municipal Couneit had been Informed that the Company was prepared to continue the rebate of 20) per cent. then in force until Decem-bor 31, 1995, and proposed that the aril period' should be terminated at that date, The Municipal Council while agreeing to the proposed date of termination of the tariff period pressed for the increase in the re-ale from 20 to 25 per cent. from April 1. fo which T have already, referred, We deterred to the wishes of" the Council although we considered it somewhat premature in view of the contem= plated revision of tant, Sliver Situation Reviewed The events of 1035 are too well known to you to call for a detailed review from me. With an increasing value of silver, financial conditions became worse and worse and the anxiety as to the currency situation Fesulted "In what was in effect a Aight from the dollar. While benefit-Ing from the higher rates of exchange we naturally "shared the general Sosiely a5 to the ultimate fate of the Eventually {n November the situation was to a large extent danaed by the abandonment by China of silver a currency and the adoption of a managed paper currency which apoars to have been based on a virtual parity in terms of sterling of per dollar, which as it so happens the existing. {aril rate of exehan lurider our franchise agreement wit the Municipal Council.
"As you will have seen from the! Directors' Report for, the year now! before you a revised tariff of charges was submitted to. the Council prior to November, 1035. This tant was prepared on the lines indicated when addressing you last_yoar and it was proposed to the Council that the domestic rate be subject to a 15 per cent, rebato to allow for the higher rate' of exchange then ruling. The iit so revised with rebate would have Yesulted= generally in lower charges to our consumers than they had been paying under the existing tant with' rebate, especially to in dustrial and landlord consumers.
"The new level of exchange resulling fom the currency measures in-(reduced by the Chinese Government in November altered the complexion of affairs, for It meant that the pro-Bose rebate was gut of the qucction and consequently that. the introduc~ ion "of the now tariff without it} would have the effect of incrossing for one year an. increase in our revenue to which we were clearly entitled, but it was and still is abundantly clear that the lower level ff exchange must result in an Increase our water rates.
From what T have just told you it follows that during the present year we have to be prepared to face the fact that the net profit for the year will Be insuficlent fully to cover dividend requirements. The deficit iti Kaye to be made good by utilize Ing a portion of the reserves provided for that purpose. In the opinion of your directors such reserves are ample to take care of the estimated dofleleney without materially weaken-Ing your Company's position. T trust that you agree with the action your directors have taken and 1 also trust that our consumers will appreciate that an increase in rates in the future The year under review has further demonstrated the success of general metering, which can now be sold to be working smoothly and well. I think T'may safely say that our relations with our consumers are excellent.
Although your Company has. not been affected by the depression through which Shanghai is passing to] the same ox lent as the majority of] commercial undertakings, nevertheless conditions ave been refected ina, Teasening of industrial and. shipping demand and to a certain extent in the revenue from domestic consumption by the downward revision of Munlcipal assessments on which domestic meter Fates are' based.
Supply To Western Arca In regard to the supply of water to the area west of the International Soltlement, t regret that again T have to report," that the subject is sill under negotiation. This is even a {greater disappointment than has been the case in former years, thought that_agreement had been reached in September last. while appreciating the friendly relations and ce-operation of the officials of the City Government with whom we have worked and fully realizing their peculiar diMieuities, still, it must be Datent that there is a point beyond Which we cannot go and in the opinion of your Board this was practi-lly reached in our September pro-ossals. However, we still hope that 8 modus operandi will be found.
'The position, therefore now is that we ure unable to supply water to any fresh consumers in the area and) Tam' afraid that this. position must remain unaltered pending s solution of the problem.
From the summary of the Engineer. in-Chief and Manager's report you will see thet your properties and plant have been well maintained throughout the year and a continuous supply fof water has been furnished at full The quality of water supplied to consumers has been excellent and again was slightly superior to that provided for London, notwithstanding. Our inferior source of supply.
General metering has reduced the consumption for domestic purposes: from 31 to 20) gallons per head per day and has also effected a considerable reduction in our maximum hourly or peak demand as a result of} which the only now works of any magnitude undertaken during the [year were the construction of a third Battery of rapid gravity Alters with an eventual output of 32 million gallons per day which T have already mentioned and the laying of an addi-tonal 2% miles of distributing mains.
The adaptation of the building ad-Joining the Company's offices to which Troferred last year was completed in June and has provided the additiona: space which we required, Our Engineer-in-Chief and Manager, Mr. Pearson, was home on leave last year and the enginceting side was in charge of Mr. Rial and the secretarial work in charge of Mr. Lock. Needless to say malters ran a smooth course and 1 am sure 1 am expressing the wishes of you all when I express our appreciation of the satisfactory manner in which the work was done by one and all, tis with much regret that I have fo refer to the death of Mr. A. M. Marshall. "He was a director in 1914 and served on the London Commitee from 1821 till hig sudden death last year.
Mr, A. W. Burkill resigned from the board in May on his retirement from the East, Mr. Burkill had been a member of the board since 1916. and T would especially stress_our charges considerably. 11 appreciation of the sreat_ interest. he addition there was the factor {always displayed in the affairs of the certainty as to the immediate success Company and the benefit the board Of the new currency measures.
Feceived from the expression of his!
In" these Circumstances, having, views and ade ice. T am glad to say regard {0 local conditions "we were that we have not entirely los: his reluctant" to submit any proposal services as Mr. Burkill has joined the
jereasing charges {o our consumers. which would have the effect of in- London comiiitce in place of the late Mr. Marshall, The following resolutions were There being no questions asked, the following resolutions were put to the meeting and passed unanlmously:—
'That the directors' report and accounts Day for the year 1008 be and they are hereby at feseived and adopted and that the bal~ (Bneee at credit of Profit and Loss "Act. fount "and of "Extra-Agreement and ing Consumers Account on Decem=
Text read from the printed page and cleaned; old type leaves the occasional error.