In reviewing the year's working the dominating factor is of course the outbreak of the Sino-Japanese hostili. ties in August. I am pleased to be able to report that your property, although situated in the area in which ghting was in progress, has come through intact and undamaged Until August in common with Shanghai generally, your business was reacting favourably to rapidly improving conditions. However, once hostilities started it at once became apparent this was no repetition of the periodic disturbances to business that have been suffered in the past but that we would have to be prepared to meet a set of vastly changed conditions for a protracted period.
Your directors after the most careful consideration, were reluctantly forced to the conclusion that the situation called for drastic retrenchment to offset the greatly reduced turnover which must be anticipated This has, unfortunately, necessitated a reduction in staff, which reduction has been effected, it is hoped, without undue hardship. Your directors and those of your subsidiary company have in recognition' of the position agreed to accept half fees until such time as conditions improve. It is particularly regretted that it was not found possible to retain the services of Mr. Jennings, our manager since 1929. He left the Company's service on December 31, 1937 on the expiry of his service agreement and returned to England where we wish him every success. Mr.
Goodman, who has been appointed manager in his place, has been with the Company ever since its incorporation having been prior to that five years in the Fittings Department of the Shanghai Waterworks Company, the business of which was taken over by the Company. He brings therefore to his new appoint-
Text read from the printed page and cleaned; old type leaves the occasional error.