For the descendents of Richard Dearie and his son John Russell
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Malayan Collieries Report Accounts and A.G.M. 1931
Malayan Collieries, Ltd.
(Incorporated in F.M.S.)
DIRECTORS' REPORT
AND
ACCOUNTS
For Year Ended 31st December. 1930.
TO BE PRESENTED AT THE
SEVENTEENTH ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD AT THE
Registered Office Of The Company.
Hongkong & Shanghai Bank Buildings, Kuala Lumpur.
on Tuesday The 31st March, 1931,
At Noon.
J. A. RUSSELL & CO.,
General Managers & Secretaries.
Malayan Collieries, Limited.
(Incorporated in Federated Malay States.)
Directors.
JOHN ARCHIBALD RUSSELL, Esq. (Chairman.)
HUBERT HARRY ROBBINS, Esq. {Deputy Chairman.)
HUGH NORMAN FERRERS, Esq.
FREDERICK CUNNINGHAM, Esq.
WILLIAM HENRY MARTIN, Esq.
ALBERT JAMES KELMAN, Esq.
General Managers and Secretaries
J. A. RUSSELL & Co., Kuala Lumpur.
Consulting Electrical Engineers.
SPARKS and PARTNERS, London.
REGISTERED OFFICES
HONGKONG & SHANGHAI BANK BUILDINGS, KUALA LUMPUR.
NOTICE IS HEREBY GIVEN That the Seventeenth Annual General Meeting of the Members of the Company will be held at the Registered Offices of the Company, Hongkong and Shanghai Bank Buildings, Kuala Lumpur, on Tuesday, 31st March, 1931, at Noon, for the following purposes: —
To receive and consider the Balance Sheet and Accounts to 31st December, 1930 and the Reports of the Directors and Auditors.
To Declare a Final Dividend for the year 1930.
To Declare Directors' remuneration for the year 1930.
To Elect Directors in place of those retiring.
To Elect Auditors for the ensuing year.
The Share Registers will be closed from Wednesday, 25th March, 1931, to Wednesday, 1st April, 1931, both days inclusive.
By Order of the Board,
J. A. RUSSELL & Co.,
Secretaries
Dated 14th March, 1931.
Hongkong &. Shanghai Bank Buildings, Kuala Lumpur, F.M.S.
Malayan Collieries, Limited.
(Incorporated in Federated Malay States.)
Directors' Report for the Seventeenth Year of the Company ended 31st December, 1930.
The Directors have pleasure in submitting their Seventeenth Annual Report and Statement of Accounts for the year ended 31st December, 1930.
In accordance with the usual practice, the working of the Collieries is reviewed in the appended reports of the General Managers.
BATU ARANG. Owing to the depression, the demand for Rawang Coal shewed a considerable falling off during the year. The present recession of trade must, however, eventually pass, and as soon as conditions become stabilised we can hope for the recovery of a large part of the demand at present temporarily lost to us. In the meantime, the Company has adjusted and still is adjusting its affairs to meet the prevailing conditions. The Company is also in a better position than ever before immediately to respond to the increased call for coal which in due course is bound to be made on it.
In view of the depressed conditions prevailing in the country, a rebate was granted to all contract consumers of 2½ % of the pit top price of Rawang Coal delivered during the last quarter of the year. The acknowledgment by customers of this concession was gratifying.
PAMOEKAN BAY. The output from this Colliery was kept below capacity because of the extraordinarily depressed state of all Eastern coal markets. The year closed with normal stocks of coal being carried, while orders in hand were fully up to the regulated output; but, unfortunately, at prices below the cost of production plus an adequate return upon the capital involved. It is difficult to visualise the market conditions of the near future; but it is clear that these cannot improve while coal, like most other primary products, is being produced in quantities in excess of a decreased demand.
In the meantime, the slowing down of production has made it possible for the Colliery Management to advance underground development, and this, we are advised, is in a sounder position than before.
GENERAL. The programme of the electrification, and virtual re-equipment, of the Batu Arang Colliery was well advanced, and the first and major part of this programme was practically completed by the end of the year; the essential expenditure for the current year being limited to a comparatively small amount.
A Prospecting Licence was obtained from the Johore Government over an area of land on which there were surface indications of coal measures. After considerable prospecting and core drilling, the geological indications obtained were such as to render unlikely the possibility of there being any commercial occurrence of coal, and drilling was discontinued.
The title under which Messrs. J. A. Russell & Co., have heretofore acted was altered to "General Managers" this being considered by the Board more appropriate to the nature of the managerial duties performed by them.
FINANCE. Advantage was taken of the cheap money available in London during the course of the year to finance the purchase of machinery, plant and stores in England, and for this purpose a lien was granted to the Company's Bankers over the sterling Investment.
INVESTMENTS. Owing to the falling off in profits and the consequent difficulty of financing the whole of the capital expenditure from the year's income, it was decided to sell part of your investments, and, accordingly, 4% Funding Loan 1960/90 to the value of £27,650 was disposed of at a figure shewing a substantial profit upon its purchase price. It is hoped by the end of the current year to commence the replacement of this investment.
PROFITS. The profits for the year
under review, subject to the Directors'
and Auditors' fees amount to . . . . $1,064,922 30
To which is to be added the unappropriated
balance from the previous account of . . $347,926 59
Less Staff Bonus, 1929 . . . . . . 11,587 16 336,339 43
$1,401,261 7J
Three Interim Dividends, two of 7 ½ % and
one of 5%, each on 257,505 shares were declared during the year absorbing . . 515,010 00
$ 886,251 73
You will be asked to sanction fees to Directors in respect of 1930 at the reduced rate of . . . . . . 20,000 00
and Auditors fees at the reduced rate of . . 2,500 00 22,500 00
Leaving available . . . . . . 863,751 73
Which your Directors recommend should be dealt with as follows: —
Final Dividend of 10% making 30% for
the year . . . . . . . . 257,505 00
Write off Leasehold Property .. . . 300,000 00 557,505 00
Balance to carry forward to next year's account . . $306,246 73
DIRECTORS. Mr. W. H. Martin and Mr. F. Cunningham, being the Directors longest in office, retire under the provision of the Articles of Association and, being eligible, offer themselves for re-election.
AUDITORS. Messrs. Evatt & Co., retire, but being eligible offer themselves for re-election.
By Order of the Board,
J. A. RUSSELL & Co.,
Kuala Lumpur,
3rd March. 103 L
Secretaries.
Malayan Collieries, Limited.
The Directors,
MALAYAN COLLIERIES, LTD.,
Kuala Lumpur.
Gentlemen,
BATU ARANG COLLIERY.
We have pleasure in submitting herewith our report upon the working of the Batu Arang Colliery during the year ended 31st December, 1930.
The output of the Colliery shewed a considerable falling off, owing primarily to the shutting down of dredging plants, and at the close of the year sales were lower by something of the order of 40%.
Maintenance of plant and buildings throughout the property and at Kundang was of a satisfactory nature.
Progress with capital works was good, and practically all work included in the first stage of re-equipment of the Colliery was completed; the new water supply being the main, and, in so far as definite commitment to further expenditure is concerned, practically the only unfinished work to be carried into the new year.
UNDERGROUND DEVELOPMENT. This has been adequate in both the North and the East Mines, in which two pits the tonnage of coal developed is entirely satisfactory.
THE NORTH MINE. Here the main dip was extended, and at the face there is a seam thickness of approximately 50 feet of coal of satisfactory quality.
Considerable improvements were made in the ventilating system, resulting in rather better working conditions in the more remote working places. All new plant installed has been for Alternating Current drive, a substation having been equipped in a central position underground.
THE EAST MINE. This Mine had worked up to very near full production when the falling off in demand for coal set in. since when it has been working at something under half its full capacity.
HYDRAULIC STOWAGE. This operated without a hitch, the sand from the Kundang pits being augmented by sandy overburden won in the process of coal stripping by electric shovel in No. 7 Open cast, and by shale, also won in the process of coal stripping, crushed to a suitable size. The total yardage stowed during the year was 237,931 cubic yards, all underground coal, not won in the course of development work, being replaced by sand or shale hydraulically stowed.
OPEN CASTS. The percentage of production from this source was much less than formerly. Reserves of coal actually stripped are satisfactory and ample for all requirements; indeed, in these times of reduced and uncertain demand, they represent a very valuable asset
BUILDINGS AND PLANT. Further progress was made with the replacement of temporary buildings by those of a permanent character; but the most marked progress made was in the installation of new plant.
Though the erection of the new power house plant was completed, the two new 2,000 K.W. Steam Turbo Electric Sets were not actually taken over; these still being in the hands of the Contractors' Erector for final adjustment. The extension of the use of A.C. power continued, and the use of independent steam units was confined to two or three installations of a more or less temporary nature.
WATER SUPPLY. This is designed to give a maximum continuous supply for all purposes of 750,000 gallons daily. The catchment area is 456 acres, of which 25 ½ acres will be inundated, the storage capacity being some 85,000,000 gallons. Construction work commenced early in the year, and, at the close, the main dam was well advanced, while the high and low service reservoirs, with capacities of 64,000 and 675,000 gallons respectively, were practically completed. It is expected that the whole scheme will be functioning by the middle of 1931.
BRICKWORKS. Erection was completed and at the end of the year the plant was ready for production on a commercial basis.
LABOUR. While we have succeeded in retaining the services of practically all the old hands, it is matter for regret that conditions are such as to make it impossible for us to keep them fully occupied. The force at the close of the year was 2,712, the total resident population being about 4,000.
GENERAL HEALTH. This during the whole year was exceedingly good.
We are, Gentlemen,
Yours faithfully, J. A. RUSSELL & CO.,
General Managers. Kuala Lumpur,
3rd March, 1931.
Malayan Collieries, Limited.
The Directors,
MALAYAN COLLIERIES, LTD.,
Kuala Lumpur.
Gentlemen,
PAMOEKAN BAY COLLIERY.
We have pleasure in submitting herewith our report upon the working of the Pamoekan Bay Colliery during the year ended 31st December, 1930.
The production was less than during the previous year, though larger quantities could have been produced had the markets throughout the East not been in an over-supplied condition, resulting in unattractive business.
MINE DEVELOPMENT. This, owing to the fact that production was considerably below capacity, was materially advanced. Boring further proved the reserves of coal to the dip, and there has been no recurrence of the heavy faulting of the seams which has, at times in the past, so interfered with development.
COAL CUTTING MACHINES. No further additions have been made. The coal is reported to be increasing in hardness with depth, and we are advised that the type of machine at present in use may later on be required to be replaced by machines of another type. Arrangements were made for the manufacturers to supply us with a cutting element of this other type of machine to fit on one of our existing machines; but we are advised by the Mine Manager that the result of the trial was not satisfactory.
GENERAL CONDITIONS UNDERGROUND. These call for no comment apart from the reported hardening of the coal with depth. Owing to the rise workings having been practically exhausted of coal, all coal winning will soon be conducted under gaseous conditions, so additions to underground plant have been designed accordingly.
SURFACE. The only improvement in technical detail during the year has been the erection of a washery to clean the production of Small coal, and this has proved itself capable of a satisfactory performance.
Three new coolie lines were completed during the year, and the piped water supply was extended.
The total labour employed on the property was 678, made up of 385 natives of the N.E.I, and 293 Chinese. The total resident population was approximately 2,000, practically the whole of which was, throughout the year, dependent upon the operation of the Colliery for a living.
GENERAL HEALTH. Apart from a somewhat disquieting state of health of the labour force during December, the Resident Medical Officer, Dr. E. Koch, has reported satisfactory conditions.
LAUNCHES. The M.L. " Kalai " continued in commission as an emergency launch to maintain communication with the nearest open port.
SHIPPING. The Mine output was lifted by 36 ships as against 35 ships during the previous year.
GENERAL. The Mine was visited by a number of Government officials including Mr. Ebenhorst van Stengbergen, Asst. Resident, Kota Baroe; Mr. Van de Pijl, Controleur, Kota Baroe, Captain Drost, District Officer-Controleur; Mr. Volten, Chief Engineer Mines Dept., Mr. Kepper, Chief Inspector for the Outside Territories, Mr. Touissant, Mines Inspector; Mr. Post Uiterweer, Labour Inspector, Mr. Germain, Electric Inspector; Mr. Brunsma, Mines Inspector, Mr. Boudoin, Boiler Inspector, and Mr. Tollig, Inspector of Weights and Measures.
We are, Gentlemen,
Yours faithfully,
J. A. RUSSELL & CO.,
General Managers. Kuala Lumpur, 3rd March,
17
(Incorporated in F.M.S.)
DIRECTORS' REPORT
AND
ACCOUNTS
For Year Ended 31st December. 1930.
TO BE PRESENTED AT THE
SEVENTEENTH ANNUAL GENERAL
MEETING OF SHAREHOLDERS
TO BE HELD AT THE
Registered Office Of The Company,
Hongkong & Shanghai Bank Buildings, Kuala Lumpur,
on
Tuesday The 31st March, 1931,
At Noon.
J. A. RUSSELL & CO.,
General Managers & Secretaries.
Charles Grenier & Son, Ltd.
Malayan Collieries Ltd.
(Incorporated in F.M.S.)
PROCEEDINGS
AT THE
SEVENTEENTH ANNUAL GENERAL
MEETING OF SHAREHOLDERS
HELD AT THE
Registered Office Of The Company,
Hongkong & Shanghai Bank Buildings, Kuala Lumpur.
on
Tuesday The 31st March 1931,
At Noon.
Malayan Collieries, Ltd.
(Incorporated in F.M.S.)
PROCEEDINGS
AT THE
SEVENTEENTH ANNUAL GENERAL MEETING OF SHAREHOLDERS
HELD AT THE
Registered Office Of The Company,
Hongkong & Shanghai Bank Buildings, Kuala Lumpur,
on
Tuesday The 31st March, 1931,
At Noon.
Malayan Collieries Limited.
(Incorporated in Federated Malay States.)
The Shareholders,
MALAYAN COLLIERIES, LTD.
Dear Sir, or Madam,
We have pleasure in reporting to you the proceedings at the Seventeenth Annual General Meeting of the Shareholders of the Company which was held at the Registered Office, on Tuesday 31st March, 1931.
Yours faithfully, J. A. RUSSELL & CO.,
Secretaries.
Dated 1st April, 1931.
Hongkong & Shanghai Bank Buildings,
Kuala Lumpur, F.M.S.
Malayan Collieries Limited.
(Incorporated in Federated Malay States).
Proceedings of the Seventeenth Annual General
Meeting.
The Seventeenth Annual General Meeting of the Shareholders of Malayan Collieries Ltd., was held at the Hongkong & Shanghai Bank Buildings, Kuala Lumpur, at noon on the 31st March 1931.
The Chairman, Mr. J. A. Russell presided and the others present were:—Messrs. H. H. Robbins, W. H. Martin, A. J. Kelman and F. Cunningham (Directors) and J. D. Morrison, C. Crompton and C. K. Paul (Shareholders).
The Chairman, before moving the adoption of the Balance Sheet and Accounts to 31st December 1930 and the Reports of the Directors and Auditors, said: —
Gentlemen,
The report and accounts having been in your hands for the required period, may I assume that it is your wish that they be taken as read? It is unfortunately not, as in previous years, my pleasure to be able to report to you a continuance of record outputs and profits; but, having regard to all the circumstances known to you, to which exceptional conditions I shall later refer, I trust you will consider the results of the year's operations as not entirely unsatisfactory.
Production at Batu Arang was 14.26% down on the previous year, while that at Pamoekan Bay was down by some 26.40%. Owing to the restriction of the output of tin, both natural and artificial, and to the general depression prevailing throughout the country, resulting in the very serious falling off of demand for the product of our Batu Arang Colliery, we are not, for the time being, able to bring into effect the still further reductions in our selling prices which we had contemplated and still hope to achieve, and which we certainly would be able to do with an increase in our turnover. In earnest of our desire to meet consumers in their endeavour to reduce operating costs, we allowed a rebate of 2½ % off the cost of coal delivered during the last quarter of the year, and it is a matter of keen regret on our part that we are not yet in a position to make this recurrent.
Sales ex Pamoekan Bay were arranged so as to absorb not only the compulsorily reduced output of that mine, but also the stocks carried into the year; we regret, however, that prices throughout the Eastern Markets have been such as to shew an inadequate return upon production costs.
With reference to the actual operation of the Pamoekan Bay Colliery, apart from the dislocation of labour in the earlier part of the year as a result of the enforcement of Dutch East Indies Labour Rules which proved to be quite inapplicable to Chinese labour, the Colliery operated reasonably smoothly; but, of course, at a reduced output regulated by economic factors.
Especially in times of stress like the present, we cannot permit the Pamoekan Bay Colliery to become an unpredictable liability upon the company, and your Board are accordingly taking steps to prevent such a possibility occurring, even if it means closing down this particular Colliery until such time as the market for this class of coal revives.
The accounts before you are set out in the usual manner. "Freehold Property" shows a small amount of further expenditure, this being on account of Land at Frasers Hill. It will be noticed that the expenditure under the capital heads "Buildings" and "Plant" was heavy, and we are pleased to be able to report that during the present year this should be comparatively light, the bulk of the essential expenditure having been incurred.
Buildings and general plant, mainly in completion of the Batu Arang Re-equipment Scheme, were added to at a cost of as much as $1,034,301/-, making $2,977,375.00, the whole being depreciated by $146,688/- which, though rather less than the figure for the previous year, is ample. All buildings upon which expenditure was charged to Capital were of a permanent character. The plant installed was of a general nature, the largest individual item again being the new power installation, expenditure upon which was virtually completed. Other expenditure was upon general underground and surface equipment, including haulages, pumps and a washery for Pamoekan Bay. The water supply scheme for Batu Arang was well advanced, and approximately half paid for, while the earthwork for a new railway deviation was practically finished. The brickworks were also completed and paid for. Later on, as the load upon the Power Station grows, additional boiler plant will be required; but that at present installed will be ample for the normal development of the Colliery for some time to come.
The item "Mine Stores, Spares and Stocks of Coal" is made up as to $411,386.92 of mine stores and spares, $102,015.93 in plant taken into stock and awaiting installation, and $96,057.32 representing coal on dumps and afloat. These figures may be accepted as normal, stores, spares and stocks of coal each being rather lower than those for the previous year.
"Sundry Debtors," "Bills Receivable" and "Debit Balances" were all considerably down during the year, this being due to the lesser turnover "Sundry Creditors," "Bills Payable” and "Credit Balances” were also down by some $116,000.00 due to the smaller volume of business.
"Investments" are smaller by $222,104.89, this sum having been realised to complete the financing of the re-equipment of the Colliery. Despite incurring so large an expenditure falling for payment in one financial year, your Board was anxious to complete the Batu Arang Re-equipment Scheme as soon as possible so as to benefit by the reduced operation costs which would result therefrom. Hitherto it had been the practice of your Board to meet the cost of all capital works out of current revenue; but it could not have done so in regard to the Batu Arang Re-Equipment Scheme without reducing the dividend for the year to below a rate of 30%, an action which, especially during a time of distress like the present, your Board considered would be hard on shareholders. To have raised the money by the issue of further shares would also have pressed severely on many shareholders. In order, therefore, to spread this large capital expenditure over two financial years and thus not seriously to interfere with the rate of dividend, the only two courses open to your Board were to raise a loan or to realise part of the Company's securities. Your Board decided that the latter was both the cheapest and the soundest method to adopt. The sale of the Funding Loan was effected towards the end of last year, when gilt-edged securities were commanding almost record prices. Your Board, in effect, has temporarily transferred part of the Company's investments from its holding in British Funding Loan to a more highly-paying investment in the Company itself. During the current year (heavy capital expenditure being for the present more or less at an end) your Board hopes to be able to commence to replace from revenue these sold sterling investments without reducing the rate of your dividend.
"Cash in Hand and at Banks" was at the close of the twelve month a comparatively small sum; but in the circumstances this could not be avoided, and, with the amounts due and payable under "Sundry Debtors," was quite ample for requirements. You will observe that the Company has given a lien to its London bankers over the balance of its sterling securities. This was done in order, if deemed advisable, at any time to be able to obtain better facilities for the cheaper financing of the Company's constant Home purchases.
There is nothing to explain in the "Trading and Profit and Loss Account;" though it will be noted that the value of the year's turnover is down by more than one and a quarter millions as compared with the previous year.
The foregoing is a summary of the position. When addressing you last year it was not thought that the decline in trade during the year would be quite so pronounced as it has been. With restriction of tin-mine outputs from August onwards, and consequent reduction in tin-mine coal consumption, it was very difficult immediately to adjust labour to the altered conditions, and for some months all labour superfluous to the requirements of the production of the reduced tonnage sold was employed upon development. In view of this, development was materially advanced, and both underground and on the surface, the latter in the form of stripped reserves, this position is eminently satisfactory. Actually proven and blocked out we have at the present moment sufficient coal to last us for 20 years at the maximum rate of output yet achieved. This, of course, bears no relation to the total coal contained in the property.
In view of the unusually large percentage of earnings which has gone into new equipment on capital account, and upon development on revenue account, it has been decided to recommend for payment a final dividend of 10%, making 30% for the year instead of the 35% to which you have become accustomed. This payment represents a distribution of 72% of the profits for the year, the balance being re-invested in your business, against an average percentage of profits distributed during the last five years of 71%.
During the twelve months under review, your Company has spent several thousand dollars in prospecting by power core drill carbonaceous shale measures in Johore. The examination of these measures proved that no workable deposit of coal existed.
At last year's Annual General Meeting, I mentioned that in order to make the fullest use of all the Company's potential assets we were investigating the possibilities of the planting of agricultural products on the land comprised in our leases at Batu Arang. This investigation is proceeding, though there has not yet been time for the experimental work in hand to shew definite results; no step, however, involving any large expenditure will be taken without the completion of preliminary trials, nor without first circularising shareholders. As you know, agricultural experiments take rather a long time to carry out, so it may be some little time yet before your Board will be able to arrive at any definite conclusions in the matter.
The investigations into the Cement manufacturing industry were completed, and we now have all the facts and figures necessary to enable us to formulate a definite proposition for the consideration of shareholders, if, or when, conditions improve. Notwithstanding the present depression and consequent shortage of money for new public and private works, we feel that potential business will eventually justify the establishment of modern works as a department of your undertaking, provided such works are assured of full support, and of some small measure of protection against any grossly unfair competition from goods dumped upon the local market by non-British producers. Such manufacturers enjoy a highly protected domestic market, which protection in their own country enables them to dump their factory surpluses upon our unprotected local market at considerably below actual cost. Given some measure of protection against such dumped goods, which dumping must otherwise inevitably strangle all industrial enterprise in the free markets of the East, we feel that we could make cement manufacture within the F.M.S. an attractive proposition to the ultimate benefit of the country, particularly in that it would help to remedy Malaya's dangerous adverse balance of trade, to which serious matter I intend referring presently.
The brickmaking department at Batu Arang is in operation, and sales of the first and primary product, common building bricks, are being made. Once the brick production is perfected, it is proposed, without any further appreciable capital expenditure, to extend operations to the making of tiles and glazed pipes, and I hope, when next addressing you, to be able to report the commercial production of these as an accomplished fact.
During 1928, we purchased the land, buildings and plant of Malayan Veneers and Plywood Co., Ltd., (in liquidation) adjoining our Batu Arang property. The purchase was made on the basis of a conservative valuation of the land and buildings for use as Colliery coolie lines; although it was also our intention to investigate the possibilities of the plywood plant for utilizing the waste timber obtained by the Company in the course of its production of pit props and other wood used on the Colliery. During the year, several of such waste logs were sent to the Continent, and considerable research work was carried out upon alternative glues and cements. Owing to the nature of the reports obtained, towards the end of the twelve months it was decided to start up the Works upon an experimental basis. The results of this experimental work are encouraging, and subject to the condition in which some trial plywood cases arrive in England, we may decide during the current year to bring the factory to an initial small-scale commercial production. This can be done with a minimum of additional cost, and this department, favoured as it would be with an exceedingly low capital outlay and the utilisation of a waste product, should be the means of contributing a little to the general prosperity of the Company.
With regard to the general policy of the Board in its investigation of the possibilities of subsidiary industrial undertakings, I ought to make clear the Board's intention of not entering into any undertaking involving much more than the re-investment of part of the Company's profits without first soliciting the views of shareholders. Finally, in regard to any of these subsidiary enterprises, it is the policy of your Board only to consider such projects as would, if they materialise, be a considerable consumer of the Company's coal, say Cement Works; or make a profitable use of some existing dormant asset of the Company, say, its 8,000 odd acres of surface soil; or of some by-product of its present operations; such, for instance, as its surplus wood or its waste spoil from mining.
In the conditions prevailing it is extremely difficult to take a reliable view of the future, and I am accordingly not going to attempt to make predictions. While the present general falling off in consumption, in terms of quantities of primary and basic products, is no doubt a phase which will in time pass, it is evident that the values of the last decade have been inflated, and that these the world over must be subjected to considerable re-adjustment before anything like the new basis essential to a revival of demand can be expected. This must, of course, take some considerable time yet.
The position here in Malaya does not seem to be very different to that in most other parts of the world, except that, as this is an exporting country of primary products, upon which remarkably little is spent upon manufacturing or up-grading, we are rather more affected than might otherwise be the case. For Malaya, a country mainly financed from abroad, that is to say economically a debtor country which has to pay its debts in produce, to be reduced to a state where imports actually exceed exports by several millions monthly, is an ominous sign and one which should not be ignored by those in a position to help, and whose duty it is to help, to bring about an improvement. Such aid might obviously be given by, amongst other measures, assisting in the production of more foodstuffs for internal consumption and encouraging and helping soundly conceived industrial undertakings, enterprises the local establishment of which would conduce to a larger permanently resident labour force and lead to a very necessary reduction of excessive imports, or to a new variety of exports.
I am not suggesting direct Governmental financial aid, which in nearly every case proves disastrous to the public purse. Broadly speaking, an enterprise needing monetary help from the Government, for its very inception can hardly be described as a soundly conceived one. What I mean is assistance somewhat of the nature, for instance, as that originally afforded to this Company by the Government when it built the railroad connecting the Batu Arang Colliery to The main line. The Government would not agree to construct that line until, not only had the coal measures been extensively proved, but a Company had been formed with a minimum of half-a-million dollars working capital. That line must now be one of the most paying in the whole of the F.M.S. Railway system. It was the only material help ever sought of or given to your Company by the Government, which has heavily subsidised other undertakings.
There are many ways of encouraging and fostering the establishment of local enterprises without the necessity of Government supplying Capital or taking shares in them, a principle which as a general rule is wrong. Any wise measures taken for increasing the prosperity of the F.M.S., for making it financially sounder and economically more independent, for benefitting its revenue (particularly for augmenting the income of the F.M.S Railways or Electrical Board) will help, in many cases materially help, directly or indirectly, the welfare of Malayan Collieries. I regretfully have in mind a project, not directly connected with your Company, which has recently received unsympathetic consideration from the Government, a project which I believe would have not only kept money in the country, reduced local costs to Government and to the community, and had export possibilities; but would also have been of great assistance to the F.M.S. Railway freights and, thus, of direct benefit to Malayan Collieries. This is my excuse for these remarks, remarks which might otherwise be thought somewhat irrelevant.
Although, as I have above tried to explain, Malayan Collieries is dependent upon the general prosperity of Malaya, your Board does not lose sight of the corresponding fact that the country and its industry are, to some small measure, in their turn affected by the efficiency and policy of this Company, and it has therefore ever before it a full sense "of its responsibility. The bulk of the Company's profits are earned within Malaya, and I am pleased to say that the bulk of its earnings are spent or re-invested within the country. We are doing our utmost to assist consumers by improving the quality of our product, and by the services of our Service Department which is in charge of an experienced combustion engineer, whose free advice and assistance are always at the disposal of clients. The manner in which this Service Department is being availed of is gratifying evidence of its helpfulness. When we have had time to complete the adjustment of our operations to the reduced demand, we also hope to be able to consider the resumption of a rebate to consumers.
While I will not predict the outcome of the current year's operations, I do not wish to finish this morning on a note of pessimism. We are experiencing trying times; but they must be transitory, and while the present undoubtedly calls for careful thought in management, constant re-adjustment of policy, and the utmost economy compatible with efficiency in operation, I and my colleagues feel confidence in the ultimate future. As regards the financial result of the current year, which is no doubt a matter of more than usual importance to you, I can only say that, with our comparative freedom from commitments on capital account, the Board will be able to consider, if necessary, the payment in dividends of a larger percentage of earnings than has been considered prudent in the past, in order that you may suffer no reduction of the present rate of distribution, which rate is only in keeping with the amount of capital which you have so patiently allowed us to re-invest in your business since it reached a dividend paying stage.
We are not asking you this year to sanction a bonus to the staff at the Collieries, and it is a matter of keen regret that the necessity for the practice of the most rigid economy in all directions has rendered this course advisable. We hope that it may later on be possible to reward, at least some, members of the staff for the really hard and worrying work performed during the year. In the meantime, staff salaries have not been in any way reduced. You will notice that your auditors, however, have accepted a reduced fee, and moreover that your Directors have recommended the payment to themselves of a fee of $5,000/- less than that which they received for last year. This is not because of any reduction of work incidental to smaller profits. On the contrary, as will be generally realised, adverse trading conditions call for much more time and work on the part of those responsible than is the case during prosperous times.
I regret that owing to illness Mr. Ferrers is unable to be present at to-day's meeting, he still unfortunately being detained in a nursing home in Hongkong; but I hope that he will soon be well enough to return to the F.M.S.
I shall be glad to answer if I can any questions bearing upon the Report and Accounts which shareholders present may care to ask.
There being no questions asked, the Report and Balance Sheet were unanimously adopted on the motion of the Chairman seconded by Mr. W. H. Martin.
The Final Dividend of 10% was unanimously approved on the motion of the Chairman seconded by Mr. A. J. Kelman.
The Directors remuneration of $.20,000/- for the past year was carried on the proposal of the Chairman seconded by Mr. F. Cunningham.
Messrs. W. H. Martin and F. Cunningham, being the Directors longest in office, retired under the provision of the Articles of Association, but being eligible, offered themselves for re-election. Mr. W. H. Martin was re-elected a Director on the proposal of the Chairman seconded by Mr. H. H. Robbins. Mr. F. Cunningham was re-elected a Director on the proposal of the Chairman seconded by Mr. A. J. Kelman.
Mr. C. Crompton proposed and Mr. J. D. Morrison seconded that Messrs. Evatt & Co., be re-elected Auditors for the ensuing year.
Mr. J. D. Morrison proposed a vote of thanks to the Company's General Managers, and also to the Staffs of the Collieries, which was carried unanimously.
The meeting terminated with a vote of thanks to the Chair.