XN000022-1964-11-23 — Page 3

149

REFERENCE. PUBLIC RECORD OFFICE

CROWN COPYRIGHT

NOT TO

CO 1030/1558

REPRODUCED WITHOUT PERMISSION

of charged.

The basic idea is to treat such re-izvested

surplus profits as funda borrowed by the company from the CONSUET. The Fund is therefore to be treated as a liability of the company and excluded from shareholders' equity. A major effect of this arrangement is to maintain a constant dovutazi pressure on charges so long as there is a substantial in this Fund; and thus to assourage the companies to opente efficiently in order to continue to earn their perfitted return on net fized asseta within the basic tariff structure.

distribu

(4) The companies will be permitted to dis

dividends

only s proportion of their disposable profit) so long as the Development Fund exceeds a certain proportion of net fixed assets. Thia da to induse the companies to

every effort to keep to a minimum their recourse

Development Fund as a source of Capital.

(5) me scheus of control is to be affective for fiftem yasza

China bi

from 1st October 1963. Regotiations as to its futur terme are to begin at the end of the twelfth year.

Belating Renowne

reserves at September 30, 1963 excluding insuranos

tax reserves and after certain adjustments for depreciation, vars approximately

$149 million.

of this, about 3118 million has somumulated since dividenda

were frosen in 1960.

question arises sa to the appropriate status of

these reserves and of the proposed Development Fund. It has been agreed

that the whole wisting reservos vill be recognised

belonging to the

company while future soorusla to Development Fund will be a liability of the

Dompany to the public.

Interest on consumers' deposita will be increased.

Interest will

be paid anally on daposits of $100 and over at the avenga rete paid in

previous year by the Hong Kong Savings Bank, The present rate is three per

Ladislation

In November, 196), Govermant announced its intention of legislating

the control of the electricity undertakings.

The new developmenta

/outlined

++

TTEI