CO129-627-8 Sale of land to Hong Kong sanitorium and hospital 1-3-1951 - 31-5-1951 — Page 6

Sect. file No.2/3093/48.

SAVINGRAM

To the Secretary of State for the Colonies.

From the Governor, Hong Kong.

th

Date.

15

March, 1951.

No.

304

Ens

1948

My despatch No.280 of 16th November, 1948. Sale of land at "Happy Valley" to the Hong Kong Sanatorium and Hospital.

1.

On receipt of your approval by telegram No.20 of 1949, detailed Conditions of Sale were prepared and communicated to the Chairman of Directors in May 1949 but have never been signed.

2.

The Board of Directors have now revised their plans and asked that the area to be sold to them should be increased to about 18,100 sq. ft. This area is in the same locality as before but extends further up the hillside on the west of the valley. The objects of this request are:

3.

(a) that they intend to allow for a set-back of

30 ft. from the main road in front of the lot;

(b) that they now propose to spend $750,000 on

rateable improvements as compared with $300,000 originally approved.

I find that, in making my recommendation in 1948, I was incorrectly advised that the shareholders are limited to a 6% dividend and that the Directors' salaries are limited to $400 per year. I am now advised that although a dividend of 6% has been distributed in the past there is nothing in the Articles of Association of the Company restricting the dividend to this figure, and that in October, 1947, $246,160 undistributed profits were distributed in the form of 12,308 bonus shares of $20 each at the rate of four shares for every five held. It is further re- ported that the remuneration of the Chairman of Directors is $500 per annum and that of any other Directors "such sum as the Company shall determine in General Meeting and failing such determination $150 per annum", besides which there is provision for remuneration of Directors for extra services. The first charge on the profits of the Company each year is a commission or bonus of 20% thereon, after the deduction of all current expenses but not of anything in respect of depreciation of assets, to the General Manager; and the permanent General Manager is Dr. Li Shu Fan who is also permanent Chairman of Directors.

40

The increased area now applied for includes a greater proportion of steep and unstable hillside which will be more difficult and expensive to develop, and is, therefore, unlikely to fetch more than $10 per sq. ft. if sold by public auction at which the upset price would be $8. For this reason, and in the light of the facts set out in the preceding paragraph, I recommend that the larger area be sold to the applicant by private treaty at a premium of $10 per sq. ft. or approximately $181,000.00, with Crown rent at the same rate per acre as already approved, with a revised Building Covenant of $750,000 to be spent on rateable improvements within 30 months, and otherwise on the conditions already approved. Executive Council agrees.

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DCB: kcw.