}
17
WEDNESDAY, NOVICIBER 5, 1975
UNDER THIS METHOD AND ASSUMING THAT THE NEW FARE. STRUCTURE IS AGREED AND THAT NO ROYALTY PAYMENTS ARE MADE, A PROJECTION OF THE PROFITS EXPECTED OVER THE FIVE YEARS 1974-78 INDICATE AN AVERAGE ANNUAL PROFIT OF LESS THAN $800,000. THIS COMPARES WITH AN ANNUAL AVERAGE OF $1.4 MILLION OVER THE PREVIOUS FIVE YEARS - 1969-73 - AFTER PAYMENT OF ROYALTY.
IN APPLYING FOR A FARE INCREASE, THE COMPANY PROJECTED ON EXISTING FARES THAT DEFORE THE PAYMENT OF ROYALTY AND TAX IT WOULD LOSE MONEY ON ITS OPERATIONS OVER THE YEARS 1975 TO 1978 AND PROGRESSIVELY AFTER THAT. IN FACT, EVEN WITH THE NEW FARE STRUCTURE AND NO ROYALTY, THE COMPANY WILL STILL MAKE A LOSS OF SOME $264,000 IN 1975.
REFERRING TO THE PEAK TRAMWAYS COMPANY, MR. RODSON SAID THAT THE FORECAST RATE OF RETURN FOR 1975 WAS ONLY 3.29 PER CENT IF THE FULL PERMIT FEE WERE PAID.
4
+THERE IS NO DOUBT THAT IF NOTHING WERE DONE TO ASSIST THE COMPANY THIS LOW PROFITABILITY POSITION WOULD DETERIORATE INTO A LOSS EARLY IN 1977. THE COMPANY HAS ALSO HAD TO EMBARK ON A RELATIVELY COSTLY CAPITAL REPLACEMENT PROGRAMME TO MEET THE · HIGH SAFETY STANDARDS REQUIRED FOR SUCH A SYSTEM.
THEREFORE, THE COMPANY APPLIED FOR A FARE' INCREASE AND WAIVER OF THE PERMIT FEE TO IMPROVE PROFITABILITY AND ENABLE IT TO ACQUIRE THE NECESSARY CASH FOR THE REPLACEMENT PROGRAMME: THE FARE INCREASE HAS DEEN APPROVED AND THE BILL BEFORE THE LEGISLATIVE COUNCIL SEEKS TO CHARGE ONLY A NOMINAL $25,000 PERMIT FEE FOR 1974 AND 1975.
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1
/18.