The net profits earned in recent years and expressed as a percentage of the capital invested in the business were considerably less than the figure to which the Company was entitled, under the franchise, especially in 1937 and 1938. Having regard also to the fact that the Company was about to enter upon a period of seasonal decline in output, continuance for the time being of the existing surcharge. subject, of course. to the regular monthly review, was recommended.
Tt was pointed out that although the Company had been entitled since December to a surcharge of 37.34 per cent. under the formula, it preferred to keep its rates as stable as possible and it had decided to waive the increase. All formulas were theoretical and required actual testing to prove their soundness. The important point for consideration was not the amount of the excess or deficit produced by the surcharge in comparison with increased expenses, but whether the Company was receiving the net return on capital invested stipulated in the franchise. It was quite apparent that the return was considerably lower than the Company was entitled to. It was the opinion of the Treasurer and Controller that the surcharge was amply justified and should be continued subject to review at a time.
Text read from the printed page and cleaned; old type leaves the occasional error.