Hint at Finance Company Meeting: Mr. F.R. Davey in Optimistic Mood Regarding Chinese Conditions Mr. F. R. Davey, presiding at the fourth annual general meeting of shareholders in the International Investment Trust Ca. of China, Ltd. held in the board-room of Messrs. E. D. Sassoon & Ca.. Lid, Sassoon House, Nanking Road, on Friday, Teferred optimistically to the state of affairs in China, remarking that "the credit of the Chinese Govern. ment stands higher to-day than for very many years. past." He algo foreshadowed an: imminent working arrangement or form of merger between the Shanghai Tramway Ca. and the China General Omnibus Ca. (in both of which the Trust Ca. has a large holding) for the co-ordina tion of transport facilities with a view to greater eMiciency, public convenience, and economy in working.
Present with Mr. Davey were Messrs. H. E. Arnhold, Hsu Singloh, Li Ming, P. W. Massey, C. J. Meager, V. Meyer, Tsuyee Pel, and T. G. Weall (directors), A. MeLure (general manager), and other shareholders, total holding of 101,600) shares being represented.
'The notice convening the meeting and the auditors' report having} been read, the chairman said:—
The report and accounts having been circulated, with your permis: sion T will take them as read. During the year covered by the accounts now before you, we have been experiencing what Is considered to be, if not a record period of depression in Shanghai, at least very nearly so. That being so, it is satisfactory that we are able to show much better results than for the previous year.
The company has now been in existence for four complete years, and it is interesting to review the: results achieved during that period. For the first working year, which ended March 31, 1981. we were able to pay a dividend of & per cent. and. to transfer to general reserve Ts. 100,000. For the succeeding year, a dividend of 6 per cent. was paid and transfer made to reserve of Tis.
250,000. In the third year, which we now know must have marked the real beginning of the depression, dividend of only 3 per cent. was} paid after a transfer to general reserve of Tls. 150,000. For the year under review, our profits (which you. will see amount to $841,848) are nearly 60 per cent. more than the profits for the year ending March 31, 1933, and our statistical position, i.e. the estimated value of the company's shares calculated from current mar= ket values of our assets is also improved ard is now sufficiently near to par to justify us in saying that! our capital ix intact. You will see' that, during four years, when there! has been economic chacs throughout the world. originating in Europe. spreading to the United States and thence to the Far East, we shall have paid. if the recommendations} now before you are accepted, divi-dands averaging over Si per cent.. and at the same time have written Off. out of profits, the whole of the preliminary expenses, underwriting commission, and debenture discount {olalling over $200,000. Our_alloca~ tions to reserve will total $900,000, a result of which depreciation in the market value of our investments has been fully provided for. That, T think, is a record with which shareholders have every reason to be satisfied. I think few, if any, investment trust companies anywhere the world can claim to have done so well during so difficult a period.
Depression Wes We have been able to weather the depression, so far, by using our organization, not merely for the investment of our funds, but, by carefully following the fortunes and prospects of different companies snd taking advantage of what we consider favourable opportunities for day-to-day dealings in shares and securities generally. We have made it our general practice' not to. distribute ju the form of dividends profit derived from other sources than interest and dividends received.
The only exception we make is in the case of profits from dealing in securities as distinct from sale of securities purchased in the first place for permanent investment. The Substantial amount of $200,690.30 which we recommend to be transferred to general reserve has been all derived from profits realised by the sale of securities which we held at the beginning of the current year, the odd amount being included in order to round off our reserve to the gute of $900,000. In this connection you will note that our accounts, for the first time, are now shown in dollars, the only tael items being the figures relating to our capital.
Tam sure shareholders will approve of the conservative policy we have adopted and would not wish that we should impair our statistical position by adding to the amount Fecommended to be distributed any. Substantial part of profits realised on the sale of investments. You will note that the dividend recommended is 75 cents per share, which is equivalent to a little under 5% per cent. Any improvement on this figure must necessarily depend, for the next few years, upon the earnings and distributions of the leading local companies in which our funds mainly are invested. Such companies are the Shanghai Land Invest ment Ca, the Shanghai Electric Construction Ca, which, as you are aware, is the Yather "cumbersome title of the local tramway enterprise, the China General Omnibus Ca., Shanghai & Hongkew Wharf Ca. and other similar land, property, utility and trading concerns. 1 will rot attempt to deal with any of the reasons why some of these companies have had to reduce their dividends, You will have been fully informed with regard to this by the various chairmen in their annual speeches. 1 will only say that there are indica. tions of better prospects and all we can do is to continue, patiently and with vigilance, to take every pose sible opportunity of increasing our nett revenue.
Mint at Transport Merger Success has at last attended the efforts of those who have worked hard for several years to secure the transfer of the head office and control of the Tramway Company to Shanghai. This movement: was finally oMigially sponsored by your company. Mr. Ellis Hayim and myself, together with Mr. Hayim's brother Mr. Albert Hayim, and Mr. A. W. Burkill, spent a great deal of time both here and in London in carrying the negotiations to a successful Issue. Tt will not be long, I am sure, before it will be necessary for substantial Jocal shareholders in both concerns, your company being one of the most important, to turn attention to the desirability of some working arrangement or form of merger" between the Tramway Company, and the! China General Omnibus Ca. which. will lead to ce-ordination of transport facilities in Shanghai. Such coordination would obviously lead. to] greater eMiciency, greater conven-fence to the public, and economy in working. Those who so readily write to the newspapers voicing their complaints of the insuficlency and alleged ineicioncy of Jocal transport do not realise, I am afraid, the immense diiculties which thos who have to solve the transport problems of Shanghai have to face. As large shareholders in both concerns, we are satisfied that marked, progress has been made, but we do. believe that, the transfer of the Tramway Company to Shanghai opens up a new and important vista of progress yet to be achieved.
1 will not give you now any de-fails regarding out investments or: the percentages held in the various classes of securities, as, during the year, the Board decided upon the policy of publishing monthly a statement of position giving this information in detail. T would call attention to the fact, however, that we have, very considerably reduced our for~ mer rather large holding in Chinese Government securities. 'This is not to be taken as indicating any lack of confidence on our part in such securities as a sound form of invest ment. Indeed, the credit of the' Chinese Government stands higher to-day than for very many years past, and that standing is reflected in the very. considerable improvement-which has taken place in the market value of all classes of Government securities. We considered, how-fever, that the proportion of, our funds held in this. particular' form investment was disproportionately high, and we also were not unmindful of the sound old doctrine that there is never much harm in taking a profit.
Text read from the printed page and cleaned; old type leaves the occasional error.