CO129-573-14 Kowloon-Canton railway- provision of a renewals fund 7-6-1938 - 11-10-1938 — Page 17

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A

contribution on a life basis would have been £355,846.

contribution somewhat smaller than a full life contribution

was considered adequate as a Renewals Fund was established

in 1920 and £1,000,000. has been accumulated in the Fund which,

it is thought, is sufficient for purely renewal purposes.

Further, most of the capital cost of the Railway was provided

out of loans raised in England and payments to a Sinking Fund

at 1% are also made in addition to the Renewals contribution.

8.

On the South African Railways the annual contribution

for renewals of permanent way and rolling stock assets is 60%

of the sum arrived at by applying the various percentages,

corresponding to the respective lives of each class of assets, tò

the full original cost of all such assets in service. This

contribution is subject to a minimum contribution from Revenue

equal to 6% of the current year's earnings and in this way the

contribution in prosperous years may be greater than in years

of low revenues. The South African Railways Administration

does not make provision for the full depreciation which is taking

place on its wasting assets but is content with contributing

from revenue a sum per annum estimated to be sufficient to meet

the expenditure of the replacement of worn out assets as the need

arises from time to time. This principle would, of course,

be less satisfactory if applied to a small railway system. We

attach a Statement showing the estimated life of each class of

asset falling under the category of permanent way, works and

rolling stock on which the Renewals Fund on the South African

Railways is based.

9.

We trust the accompanying information will furnish

the Governor of Hong Kong with the particulars he requires.

We

could doubtless obtain similar information regarding other

railways if required but the Kowloon-Canton Railway has now been

/in