CO129-555-1 Hong Kong Tramways Ltd.- petition 10-7-1935 - 4-10-1935 — Page 14

Enclosure

- 3-

thereafter shall pay to the Government the

following royalties:-

(a) from and after the expiration of the

said ten years, for the period of

twenty-five years, five per cent per

annum of the profits;

(b) after the said period of twenty-five

years has expired and for so long as

the company shall exercise their said

rights, powers and authorities, twenty-

five per cent per annum of the profits. The main object of the present petition

seems to be a modification of Section 47(b) so as to

relieve the company of the increase in royalties from 5%

to 25% as from 22nd September, 1939.

It is surprising in the circumstances and

in view of the alleged serious impairment of the financial

position of the company that no annual report or balance

sheet is appended in support of its contentions. For convenience of reference I therefore append a copy of the latest annual report and balance sheet of the company.

Although the company doubled its capital in 1925 by the issue of 325,000 bonus shares of $5.00 each, it has been

able in respect of its doubled capital to pay dividends, notwithstanding "its present sound financial policy of

setting aside annual reserves to meet the increase from 5% to 25% in the Government Royalty which becomes obligatory as from September 1939" (vide paragraphs 71 and 86 of the petition), as follows:-

14

1925

22%

1926

22%

1927

28%

1928

28%

1929