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For the descendents of Richard Dearie and his son John Russell


Malayan Collieries Report Accounts and A.G.M. 1932

Malayan Collieries, Ltd.
(INCORPORATED IN F.M.S.)
DIRECTORS' REPORT
AND
ACCOUNTS
For the Year Ended 31st December, 1931
TO BE PRESENTED AT THE
EIGHTEENTH ANNUAL GENERAL MEETING OF
SHAREHOLDERS
TO BE HELD AT THE
Registered Office of the Company,
Hongkong & Shanghai Bank Buildings, Kuala Lumpur,
ON
Thursday the 31st March, 1932, At Noon.
J. A. RUSSELL & COMPANY,
General Managers & Secretaries

Malayan Collieries, Limited
(Incorporated in Federated Malay States.)
Directors.
JOHN ARCHIBALD RUSSELL, Esq. (Chairman.)
HUBERT HARRY ROBBINS, Esq. (Deputy Chairman.)
FREDERICK CUNNINGHAM, Esq.
WILLIAM HENRY MARTIN, Esq.
ALBERT JAMES KELMAN, Esq.
Alternate, ROBERT JOHN TURNBULL, Esq.
General Managers and Secretaries..
J. A. RUSSELL & Co., Kuala Lumpur.
Consulting Electrical Engineers.
SPARKS and PARTNERS, London.
HONGKONG & SHANGHAI BANK BUILDINGS, KUALA LUMPUR.
NOTICE IS HEREBY GIVEN That the Eighteenth Annual General MEETING of the Members of the Company will be held at the Registered Office of the Company, Hongkong and Shanghai Bank Buildings, Kuala Lumpur, on Thursday, 31st March, 1932, at Noon, for the following purposes: —
To receive and consider the Balance Sheet and Accounts to 31st December, 1931 and the Reports of the Directors and Auditors.
To Declare a Final Dividend for the year 1931.
To Declare Directors’ remuneration for the year 1931.
To Elect Directors in place of those retiring.
To Elect Auditors for the ensuing year.
The Share Registers will be closed from Friday, 25th March, 1932, to Friday, 1st April, 1932, both days inclusive.
By Order of the Board,
J. A. RUSSELL & Co.,
Secretaries. Dated 8th March, 1932.
Hongkong & Shanghai Bank Buildings. Kuala Lumpur, F.M.S.
Malayan Collieries, Limited
(Incorporated in Federated Malay States.)

Directors' Report for the Eighteenth Year of the Company ended 31st December, 1931.
The Directors have pleasure in submitting their Eighteenth Annual Report and Statement of Accounts for the year ended 31st December, 1931.
As is customary, the working of the Company's undertakings is reviewed by the General Managers in their report which is appended.
Batu Arang Colliery, The depression which so affected production and sales during the previous year not only continued but intensified, the actual sales being 159,313 tons lower than those during the previous year.
It is only by virtue of the large capital outlays of the past five years on costs-reducing equipment, and the efficient organisation which has been built up, that it has been possible to achieve the results which are shewn and to contemplate a continuance of the present decline without undue dismay.
Pamoekan Bay Colliery. As indicated last year, your Board was determined that this Colliery should not during a period of stress become a drag upon the general resources of the Company, and as soon as it became evident that markets for bunker coal were unlikely to recover sufficiently to make possible the disposal of the output without an actual loss, steps were taken to close it down, and the Colliery is now in charge of a caretaker with a small labour force for surface maintenance work only. All stocks of coal produced have been disposed of, while all movable plant which could usefully be employed at Batu Arang has been transferred and incorporated in the plant there.
General. The capital expenditure during the year was confined to the completion of all but one material item of the work carried forward from the previous year, the largest individual item being the completion of the new Water Supply, and the only new work of any consequence commenced and not completed was the erection of a coal-washing plant.
Bricks were produced and sold throughout the year, while Plywood for building and packing purposes was added to the products of the Company.
A Prospecting License was obtained from the Perak Government over an area of land near Bidor which was said to contain good quality china clay. This was extensively bored and representative samples of the clay were sent to England for testing and report. The clay is described as a pipe clay and not a true china clay. An application for an area has been lodged with Government; but without the Company so far receiving any definite reply.
In connection with the proposed manufacture of Cement, prospecting rights were also obtained over a limestone deposit within a short distance of Batu Arang, and the necessary preliminary surveys, sampling and analyses were carried out. Final sampling is now in progress with satisfactory results.
Investments. These remain unaltered, and though the market value as at the close of the accounts was somewhat under the purchase cost, this position has since righted itself and the present value is at least equal to the original cost.
Profits. The profits for the year under review, subject to the Directors' and Auditors’ fees amount to ... ... $711,698.60
To which is to be added the unappropriated
balance from the previous account of ... 306,246.7J
$1,017,945.33
Three Interim Dividends of 5% each totalling
15%, on 257,505 shares, were declared during the year absorbing ... ... ... $386,257.50
$631,687.83
You will be asked to sanction fees to Directors in
respect of 1931 at the rate of ... ... $20,000.00
and Auditors fees at the rate of ... ... 2,500.00 22,500.00
Leaving available ... ... $609,187.83
Which your Directors recommend should be dealt with as follows :—
Final dividend of 7 ½ %, making 22 ½ % for
the year ... ... ... $193,128.75
Write off Freehold Property 7,901.25
Write off Leasehold Property ... ... 100,000.00 $301,030.00
Balance to carry forward to next year's account $308,157.83
Directors. Mr. A. J. Kelman and Mr. H. H. Robbins, being the Directors longest in office, retire under the provision of the Articles of Association, and, being eligible, offer themselves for re-election. During the year, Mr. H. N. Ferrers resigned his seat on the Board owing to ill-health. Mr. A. J. Kelman proceeded Home on business and Mr. R. J. Turnbull was appointed as his alternate.
Auditors. Messrs. Evatt & Co. retire; but being eligible offer themselves for re-election.
By Order of the Board, J. A. RUSSELL & CO.,
Secretaries,
Kuala Lumpur,
8th March, 1932.
Malayan Collieries, Limited.
The Directors,
MALAYAN COLLIERIES, LTD.,
Kuala Lumpur.

Gentlemen,
We have pleasure in submitting herewith our report upon the working of the Company's undertakings, during the year ended 31st December, 1931.
BATU ARANG COLLIERY. The sales of coal shewed a further considerable falling off, the demand being extremely uncertain and erratic owing, in a large measure, to the trend of the tin market and to the operation of the tin restriction legislation.
To counteract the effect of the largely decreased sales, we have been fortunate in having the aid of the new plant and equipment installed and brought into commission during the last year or so, and without which the results shewn could not possibly have been achieved. Every measure has been taken to economise up to the point of not impairing the actual safety of the plant and operations, and of not causing any more distress amongst the permanent labour force than has been absolutely unavoidable.
All principal capital works brought in unfinished from the previous year were completed, the material exception being the new Railway deviation and marshalling accommodation, work on which was slowed down and is to be spread over the current year.
Underground Development. This, with the decreased demand for our product, was becoming too far advanced and a halt has accordingly been called in the main incline extensions in both the North and East Mines. Very large tonnages are developed, especially in the East Mine, and further sinking need not be contemplated for some considerable time.
Underground Production. The North and the East Mine were each capable of producing the entire demand during the second half-year; but the production was spread in such a way as to ensure the most economical working of each mine and the retention of as many men as possible.
The mines at the moment are operating at less than half capacity during two days out of three, the third day being a complete shutdown but for power plant, subsidiary undertakings and coal despatch.
Coal cutters were reintroduced under longwall conditions especially developed for the purpose, and results both technically and economically have proved entirely satisfactory. Though more machines are on hand, further units will not be employed in production until full employment can be found for the whole of the present labour force.
Hydraulic Stowage. The Kundang sand pits were shut down quite early in the year, all stowage material required to replace the reduced extraction of coal being obtained in the course of stripping and crushing operations at Batu Arang. This material is not so suitable, clean and convenient to handle underground, as the washed sand from Kundang; but the economy as a result of its use is considerable. Unfortunately, the supply is not unlimited and we shall have to augment it with sand from Kundang when a greater demand for our coal returns.
Opencasts. Production from this source was on a still further reduced scale, and the tonnage of stripped reserves of coal at the close of the year exceeded that at the beginning.
Buildings and Plant. Maintenance throughout was of a satisfactory nature.
A number of new buildings were erected, mostly in continuation of the policy of gradual replacement of temporary buildings.
A good deal of new plant was brought into commission and the year saw the completion of the electrification of the property. While the bulk of the Colliery work proper is now converted to A.C. power, quite a lot of the D.C. electrical equipment has, in the interest of severe economy, been utilised in the subsidiary undertakings, and so the D.C. load is considerably higher than it was expected would be the case at this date. Conversion will, of course, continue as opportunity offers; but unless the savings are calculated to be fully compensatory, we are reluctant to scrap still usable D.C. plant for the sake of converting to A.C.
Water Supply. The principal work in connection with the new 750,000 gallon per day supply was concluded during the year, and reticulation is now in progress and will be completed during the current year.
The supply now available of high and low-level filtered and unfiltered water is sufficient for all requirements of the property present and prospective for many years to come.
PAMOEKAN COLLIERY. Owing to the virtual collapse of the Eastern bunker-coal market, it was decided early in the year to suspend production at this Colliery, and steps were immediately taken to withdraw the underground plant and to secure the workings against a shutdown of an indefinite period.
All members of the staff and Chinese labour force were repatriated. Stocks of coal were disposed of and all movable plant which it was considered could usefully be employed at Batu Arang was transferred. The whole position was cleared up before Great Britain went off the gold standard, since when the Eastern coal markets have been even more difficult, especially for producers in such countries as the Netherlands Indies whose currency is still based upon gold.
SUBSIDIARY UNDERTAKINGS. Clay working. 6.3 million bricks were produced of which 5.4 million were either sold or utilised on the property, the balance going into stock.
Considerable time and attention have been devoted by the Ceramic Chemist to the perfection of pipe and tile mixtures, and it is hoped that a commencement of the production of these products will be possible during the current year.
Plywood. This department was brought to the production stage by the end of the year, and commercial sales of the products have since commenced. To date, the production of building-panels and chests for packing rubber has been concentrated upon with, we are pleased to say, quite encouraging results.
Agriculture. The small scale experiments in agricultural products did not yield conclusive results one way or the other except perhaps in connection with Pineapples of the Singapore and Sarawak varieties, for the growth of which our soil would not seem to be entirely satisfactory. The rather larger area of plants of the Hawaiian variety imported by us from Honolulu is just coming into bearing, and as the first fruits are superior in flavour and texture to the local varieties, it may prove that there are possibilities in the cultivation and canning of the Hawaiian fruit.
Cement Manufacture. Considerable further work was conducted in connection with the proposed installation for the manufacture of Cement, including surveys, preliminary railway location, sampling, and analyses. The work of sampling the limestone deposit at the proposed quarry site is still in progress.
GENERAL. An area at Bidor was bored to test the quality of a bed of pipe clay, and, in compliance with your instructions an application was lodged for a lease of a selected area.
We have succeeded in retaining at Batu Arang practically the same resident population as resided there during the previous year; though, as the work which we have been able to offer it has been considerably less, we have encouraged members of the labour force to augment their earnings, or to reduce their cost of living, by growing fruit and vegetables or by raising pigs, the area devoted to which pursuits is now considerable.
The health of the labour force and resident population remained exceedingly good.
During the early part of the year, we had the pleasure of showing round the property the late Chief Secretary, the Hon'ble Mr. C. W. H. Cochrane, C.M.G., while during September an opportunity was afforded us to entertain the members of the Malayan Association of the Institution of Civil Engineers.
We are, Gentlemen, Yours faithfully,
Kuala Lumpur, J. A. RUSSELL & Co.,
8th March, 1932. General Managers.
MALAYAN COLLIERIES

Malayan Collieries, Ltd.
(INCORPORATED IN F.M.S.)

18
DIRECTORS' REPORT
AND
ACCOUNTS
For the Year Ended 31st December, 1931
TO BE PRESENTED AT THE
EIGHTEENTH ANNUAL GENERAL MEETING OF
SHAREHOLDERS
TO BE HELD AT THE
Registered Office of the Company,
Hongkong & Shanghai Bank Buildings, Kuala Lumpur,
ON
Thursday the 31st March, 1932,
At Noon.
J. A. RUSSELL & COMPANY,
General Manager & Secretaries.

Malayan Collieries Ltd.

(INCORPORATED   IN   F.M.S.)

PROCEEDINGS

AT   THE

EIGHTEENTH ANNUAL GENERAL MEETING   OF

SHAREHOLDERS

HELD   AT   THE

Registered Office of the Company,

Hongkong & Shanghai Bank Buildings, Kuala Lumpur,

ON

Thursday the 31st March, 1932,

At Noon.

Malayan Collieries, Ltd.

(INCORPORATED   IN    F.M.S.)

PROCEEDINGS

AT   THE

EIGHTEENTH ANNUAL GENERAL   MEETING   OF

SHAREHOLDERS

HELD   AT   THE

Registered Office of the Company, Hongkong & Shanghai Bank Buildings, Kuala Lumpur,

ON

Thursday the   31st March, 1932, At Noon.

Malayan Collieries, Limited.

(Incorporated in Federated Malay States.)

Hongkong & Shanghai Bank Buildings, Kuala Lumpur, F.M.S.

The Shareholders,

MALAYAN COLLIERIES, LTD.

Dear Sir, or Madam,

We have pleasure in reporting to you the proceedings at the Eighteenth Annual General Meeting of the Shareholders of the Company which was held at the Registered Office, on Thursday, 31st March, 1932.

Yours faithfully,

J. A. RUSSELL & CO.,

Secretaries.

Dated 31st March, 1932.

Malayan Collieries, Limited

(Incorporated in Federated Malay States.)

Proceedings   of   the   Eighteenth   Annual   General    Meeting.

The Eighteenth Annual General Meeting of Malayan Collieries Ltd., was held at the Hongkong & Shanghai Bank Buildings, Kuala Lumpur, at noon on the 31st March,  1932.

The Chairman, Mr. J. A. Russell presided and the others present were: —Messrs. H. H. Robbins, W. H. Martin, F. Cunningham and R. J. Turnbull (Directors) and W. G. C. Blunn and C. Norman Bennett (Shareholders.)

The representative of the Secretaries having read the notice convening the Meeting, the Chairman, before moving the adoption of the Balance Sheet and Accounts to 31st December, 1931 and the Reports of the Directors and Auditors, addressed the Meeting as follows : —

Gentlemen,

The report and accounts having been in your hands for the required period, I will assume it is your wish that they be taken as read. It is unfortunate that a still further restriction in profits falls to be recorded by me; but having regard to the all encircling gloom, I trust that the result of the year's trading, and the manner in which it is proposed to dispose of these results, will be accepted as the very best that we have been able to do for you during an exceedingly difficult period of general economic depression.

In addressing you last year, I indicated the possibility of drastic action becoming necessary in connection with Pamoekan Bay. Shortly after that meeting, we lost several Pamoekan coal sales contracts—contracts that we had successfully held for years—to rival coal producers who seemed intent upon disposing of their product at prices which could not possibly have shown them anything but a loss on their cost of production plus freight. It was, therefore, decided, pending the return of more rational market conditions, to shut down this particular colliery. Events, since the accomplishment of this shutdown, have, in some small measure, compensated for the disappointment which this seemingly retrograde decision caused your Board at the time, because the losses incurred by those producers so largely responsible for the market debacle, and who have still gone on producing and selling at under cost, must by now be very serious indeed.

Sales of Malayan (that is to say, of our Batu Arang Colliery coal) also shewed a material falling off, as of course the troubles of the tin mining and rubber industries, and indeed of the F.M.S. generally, are our own troubles. Every attempt has been made to counteract the effect of the falling demand by reduced costs; but there is a limit, especially in a colliery undertaking such as ours, beyond which it is not real economy to go, and though your Board is not prepared to adopt the easy attitude of either believing or saying that everything possible has now been done, the time and position are very near when it will only be by the sale, or the utilisation in subsidiary undertakings, of a larger number of tons of coal that further material reductions in costs can be effected.

To come to the accounts, these are before you set out in the usual manner. The expenditure on capital account was much less than during the previous year; but is still considerably higher than the sum for which we have budgeted for the current one.

"Buildings and General Plant" were added to at a cost of $420,564.26 raising these accounts to a total of $3,248,660.91, the whole being depreciated by $184,799.01. As is usual, all buildings, the expenditure upon which was charged to capital, were of a permanent type. The new plant installed during the year was of a general nature.

The allocation to depreciation may seem to you to be high; but your Board has considered it to be in the interest of the soundness of the Company to reduce the value of its buildings and plant to the lower replacement values ruling to-day. The main works of the water supply were completed, and the only large improvements outstanding at the close of the year were the new railway sidings deviation and the erection of the washery, the plant for which latter was transferred from Pamoekan Bay.

The item "Mine Stores, Spares and Stocks of Coal" is made up as to $383,313.33 of mine stores and spares, as to $45,653.53 of plant taken into stores and awaiting issue for installation and as to $13,630.00 of coal in stock. All these figures are considerably lower than those for the previous year, as, in keeping with the times, we have tried to avoid accumulating dumps of unsold coal, and are also operating the mine on the smallest possible stock of supplies.

"Sundry Debtors, Bills Receivable and Debit Balances" is down on the previous year by $75,560.92, this being due to the reduced turnover. It was considered advisable to add $20,000 to "Bad Debts Reserve," bringing this item up to $100,000. "Sundry Creditors, Bills Payable and Credit Balances" is also down by as much as $63,698.04, again due to the smaller volume of business. Owing to the curtailing of our programme of development, the Company has no large liabilities to meet during the coming year. "Staff Leave and Passages" is high especially when compared with the much smaller provision for the current twelve months. This exceptional heaviness of expenditure for last year was due to the large reduction in the European staff consequent upon the diminished output of coal.

"Investments" remain unaltered, and while at the close of accounts the market value was less than the actual cost, the market has since appreciated and the value is now something in excess of the actual cost. It is hoped that the time will not be long deferred when we shall be able to build up the Company's investments at least to an amount covering the Amortisation Reserve. In the meantime, it is satisfactory to remember. that if funds, which it might by some be said should have gone into investments outside the property, have been invested within our own business in extra plant and equipment, it is this extra plant and equipment that is at this very time materially assisting us to ride the depression with a reasonable measure of profit; besides, incidentally, earning for the Company a larger return than could the investment of the money in correspondingly safe undertakings outside.

"Cash in hand and at Banks' was at the close of accounts the comparatively small sum of $61,840.49; but this should of course be read in conjunction with the amount of "Sundry Debtors," the bulk of which amount was received during January. The cash available on the due date will be ample to meet the requirement of the final dividend that we are recommending to you should be paid.

The " Trading and Profit and Loss Account " is clear and straightforward and does not, I think, call for any comment, except that the years turnover is down by the large amount of $1,705,469.75 on the figure for the previous twelve months. Your Company paid the F.M.S. Government about $100,000 in royalty during the year, some of the timber royalties appearing under the heading of working expenditure. The F.M.S. Government suffered a loss compared with the previous year of approximately $40,000 in royalties, due to the decreased demand for Malayan coal.

The foregoing is a summary of the position as expressed in figures. When addressing you last year it was of course apparent to all of us that we were confronted with another year of further constriction of trading conditions; but perhaps the actual has exceeded the expected in its intensity.

That we are still very much in the wood seems quite evident, and I am afraid that I consequently cannot predict any marked improvement in your Company's results for this coming year over that of last. It will be your Boards constant endeavour, however, to place itself in a position to present results at least as good as those now being reviewed; although it will readily be accepted that the country and its institutions cannot suffer through this world-wide economic chaos without our Company also suffering in at least direct proportion.

For instance, the Railways, our largest individual consumers, are very hard hit, not only by the slump, but by a road competition that many consider grossly unfair. To counteract the effect of a shrinkage in traffic, the Railway Administration, whether wisely or not is a matter of opinion, has considered it good policy to increase some of its freight rates, including coal, over the longer distance hauls, and this increase came into force on the 1st February. Realising that a number of our longer distance consumers are not in a position at this time to pay extra freight, and in order to protect our own interest in a district where we are brought into competition with an undertaking which has been rendered effective only by the sheer weight of a Government subsidy, we are carrying this extra freight charge for our customers at a cost to the Company, according to the prevailing demand, of from   $30,000 to   $75,000 per annum.

In addition to this, we are offering to the F.M.S. Railways an immediate reduction on their still current contract that should result in a saving to it, upon the basis of its consumption of last year of over $100,000 and on the basis of its peak year of 1929 of $240,000 per annum.

Naturally, to counteract in substantial part these large concessions to consumers, economy most rigid and an efficiency of a high order have been and are still increasingly called for, and your Board can assure you that every endeavour will be exerted to achieve this double goal. The task is a severe one in these times of small demand; but if the Company can maintain its position under present conditions, the future, when prosperity revives, can be regarded with pleasurable anticipation of a return to larger earnings.

As the General Managers have pointed out in their report, coal development at Batu Arang is now sufficiently far advanced to do for some years to come. Accordingly, in the interests of economy in the timbering and maintenance of roads and airways and in their pumping and ventilation, all further sinking has been suspended.

The progress made with stripping was satisfactory, and a number of improvements in technique both underground and on the surface were introduced, mostly as a result of ample electric power being available at all points. With the completion of the Washery now in the course of erection, the economy of extraction, always high owing to the practice of sand stowage, will still further be improved. Though our reserves of coal are very large, it is plainly of the utmost importance to ourselves and to the country that they be utilised with as little waste as possible.

In recommending the payment of 22 ½ % for the year, your Directors have agreed to distribute a larger percentage of a years earnings than it has been usual for this Company to do. This is not being advised without due regard for the requirements of the Company's operations during the continuance of the present depression; but it is felt that, in these times of reduced income and general gloom, any extra distribution of money is not only likely to be very welcome to shareholders, but beneficial to the country at large by helping in some small measure to increase the money in local circulation. Such a policy will also, incidentally, tend to uphold the standing of this country as a field for the investment of capital in other than the fundamentally sound but at present sorely tried staple industries of tin and rubber.

In these days of inflated capital and the effects thereof, it is perhaps as well at intervals to emphasise the fact that in the case of your Company the nominal par value of your shares bears no relation to the actual amount of capital which is employed in your business, so that while this year we are paying 22 ½% on the paid-up capital of the Company, the actual return upon the total amount of capital which you have sunk back in developing your concern is only about 6.7%.

Needless to say, the times call for the utmost caution in all things; but your Board has been, and still is, most anxious not to adopt in any connection a policy which might benefit the present to the detriment of the future. At Batu Arang we are now feeling the benefit of the large capital outlays of recent years, and, it goes without saying, also of the cheaper cost of labour. Unfortunately, these benefits are not so apparent over the smaller tonnages now dealt in, and every endeavour is consequently being made to extend the use of our main product, Malayan Coal. The object which we have in mind in striving for such an increased use is the lower prices which we would then be in a position to concede to our present consumers, and to quote to new ones.

Apart from that demand for coal for steam raising purposes which lies beyond our present distance-radius of price effectiveness, probably the largest potential consumer within Malaya would be a Cement manufacturing industry, the establishment of which it is the hope of your Board either to undertake or to foster. Since last addressing you, the Government of the F.M.S. has imposed a duty on the importation of Cement, apparently with the dual purpose of raising revenue and of helping in the establishment of a local industry. We have, as you know, already conducted extensive investigations into our resources and on our raw materials—having had the latter commercially converted into cement in England and on the Continent—and we possess very full expert opinion upon all relevant points. The only step which we might still take is to get an actual visit made to the spot by a cement expert. We have, accordingly, arranged for such a visit by a well-known cement consulting engineer who is due to arrive in the country today. After a study of local conditions he will prepare for us a concluding report upon our exact position, especially in regard to our ability to compete in those markets outside the F.M.S. on which we are relying to absorb any-surplus capacity of our proposed factory. Subject to transportation costs to export points, we ourselves believe that we should be able to compete with all cements except those which are recklessly dumped, and if our consulting engineer, as a result of these very careful investigations of every aspect of the matter on the site, confirms this view, we hope to be able very shortly to formulate a definite scheme. Lest, however, anxiety be felt by some shareholders at the prospect of being called upon to subscribe considerable amounts of fresh capital for a cement works at a time of great financial stringency, I may say that it is not the present intention of your Board to suggest such a course.

Since last addressing you, the Plywood manufacturing department at Batu Arang has been brought into commercial production and I am able to say that the demand for the product is encouraging. We could quite safely say that the demand was entirely satisfactory but for the well-known fact that prejudices die hard. While we are able to offer a pink or redwood chest possessing all the qualities of the best imported chests except colour plus considerable price advantage, the majority of buyers are reluctant to adopt them, and so the real demand to date is for our Class "A" or white-wood chests, which, owing to the lesser abundance of suitable white timber, is rather more expensive, but still definitely competitive. The capacity of the plant represents but a small proportion of the total chests imported into the country; but even so it is a step, both in principle and practice, towards reducing the colossal sums spent annually in importing timber and timber products into this country, articles which could and should be produced locally. The net importation of timber, in the form of lumber only, into British Malaya has averaged during the last three years no less a sum than two and a half million dollars and actually in tonnage and value was greater than that officially produced within the country itself. In so well wooded a land as is British Malaya, where Government has spent literally millions on forest administration and research, this is an astounding anomaly that reflects gravely on our F.M.S. system of economy. In the Philippines, with similar forest resources, lumber is one of the principal internal and export industries, and a source of great employment to the people and of revenue to the State. In British Malaya thousands of acres of precious timber have been in the past destroyed for planting and many more thousands will be so destroyed when the planting industry revives. This is no criticism of the planting industry; but of the system which after years of running an expensive administrative and research department has apparently not yet devised a method of profitably exploiting our several large areas of excellent forest before the same is alienated for cultivation; nor, it would seem, of being able to encourage others so to exploit them.

In the above connection, it is interesting to note that the High Commissioner and many others, official and non-official, have in recent years repeatedly stressed the paramount necessity of having more industries in Malaya, particularly export ones, than just tin and rubber. As one who has known this country for 30 years and who has acquired in it an interest which, if not great, at least is important to the speaker, the wisdom of this view has long been evident. My firm, either for its own account or upon behalf of your Company, has during the past ten years or so considered quite a large number of new industries or enterprises and closely investigated several of them. Most have proved to be unsuitable for either interest, unsuitable, anyhow, at the present stage of the country's development or in the existing condition of the particular industry under examination, while the opportunity for one—a steam power station in the Kinta valley—was missed by us by our moving too cautiously in the matter, to the financial loss, I think, both of your Company and Government. A very few have been embarked upon and a few more are still under investigation, some for Malayan Collieries and some for my own private firm. Despite official pronouncements, however, it is occasionally disheartening to find that some Government departments and officials are inclined to be slow and unhelpful in connection with and in one case definitely opposed to attempts to establish new projects in Malaya. There are, needless to say, many who are the exact reverse of this and who do what they can to further the inauguration of new industries. In saying that a few exhibit an apathy in regard to endeavours to create fresh forms of local enterprise or even an antagonism towards such ideas, I am not referring to any request for Government subsidies. I am inclined to be against Government subsidies and I am firmly convinced that, in so far as any which have yet been given are concerned, the State would be infinitely better off had they never been granted. I can think of several private undertakings which have obtained F.M.S. Government financial aid; but I cannot recollect a single one which has ever been a financial success and repaid Government.

Our Brickworks produced some six and a half million bricks during the year, of which five and a half were delivered to consumers or used on the property. The department is now well established to cater for the demand for all description of bricks, especially for the large consumption that is bound to arise when prosperity returns to the country and interest in building revives. This may be some considerable time ahead, as under present or immediately prospective conditions the country would seem to be fairly well provided with buildings. In the meantime, the works will operate to supply the demands put upon it both by the public and your own undertakings, any surplus going into stock against a renewal of normal demand.

Owing to the difficult nature of the Malayan clays, work on the production of good quality roofing tiles and glazed pipes has not progressed as rapidly as we had hoped. We have sent many samples to England for testing and report and have now engaged a ceramic chemist for experimental work at our laboratory at Batu Arang on local earths. We believe that it is only a matter of a little time before the production of one of these products, if not of both, can be proceeded with on a commercial scale, and, what is important, with very little additional capital outlay.

The investigation of agricultural products, other than rubber, to plant upon the Company's Batu Arang leases has not so far produced definite results. It was hoped that the growing and canning of pineapples might prove an attractive solution of the problem, and an experimental plot of the varieties of pines locally grown, as well as one of Hawaiian varieties, were accordingly established. The first crops from the local kinds rather suggest that our soil conditions are not entirely suitable for this type of pines. The Hawaiian variety, some 70,000 plants of which we imported from Honolulu and put down, has just commenced to fruit, and the texture and flavour are undoubtedly superior to those of the local kinds; but it is as yet too early to judge as to their suitability for profitable canning. We are perfectly well aware that there is little, if anything, in the production of unimproved local varieties and in the canning of them to the grades at present worked to, and if ever we should propose to you the planting up of an area of pines under intensive methods of cultivation, and on a scale sufficient for a modern factory of an economical capacity, a type of factory such as is not yet known in British Malaya, it will be with in mind the production of a superior article which would command a share of the market at present held by the Hawaiian product, and at a price somewhere between that enjoyed for the Hawaiian fruit and that suffered by the local packers for what is known as the Singapore variety. In the meantime, we are advised that some of the larger Hawaiian canners have recently incurred very heavy losses on operations; but this we think is primarily due to the buying public being quite unable, in the present state of the world, to pay the prices required to support the very expensive organisation that has grown up during two decades of enormous expansion and prosperity in the Hawaiian canned pine industry.

Oil Palm, at the costs at which it could be planted under present conditions, has had the very serious consideration of your Board; but here again adverse market factors have counselled caution. Prices have now recovered to a level at which an oil palm estate, capitalised at the figure which could be achieved by opening up at the present time with no dead capital and devoid of frills, could be made to shew quite satisfactory returns. In short, if we felt assured of a permanent market not materially under £20 per ton for the commodity, oil palm would seem to be an answer to our search for a profitable way of utilising our surface area.

In the Directors' Report accompanying the Accounts, you will have seen reference to an application for a block of land containing a clay which, although our technical advisers are not satisfied is a true china clay, may, nevertheless, prove suitable for some of the purposes to which china clay proper is frequently put. We have not yet heard from Government its decision regarding our application. If this is favourable, we propose further testing the deposit and its probable markets in a small commercial way before incurring any considerable outlay in its development.

Before concluding my remarks, I think that at the risk of being perhaps justly accused of windyness and of mentioning something that is very evident, I might say that this country is not singular in its misfortunes, the deflation from which it is suffering being mainly due to the depression of the whole of the rest of the world. Unless you think that the greater part of the civilized globe is not in our time going to recover, you must, therefore, believe that Malaya itself will within our lives regain prosperity. It is only a question of how long it will take to do it. One or two, perhaps three or four or even more years; but eventually it will come, although the country may never be able during our own period to indulge in quite as many of the luxuries, if not indeed the extravagances, of all forms of administration, private and public, as it has in the past. Despite that, I believe this country will eventually reach a volume of production and trade still unattained. The percentage of profits will no doubt be smaller; but the total value much greater. I cannot, in fact, conceive that so favoured a country as Malaya is economically finished; if it be, then the rest of the Earth is economically at an end. Holding as I do to this belief, I have every faith in the future of Malayan Collieries, Ltd. Financially your Company is in a sound position, and I am of the opinion that it can weather any likely storm. Under closely furled sails may be, and perhaps with little to spare; but come through it will.

To return to the more immediate present, the near outlook for this country is dark; but unless it gets very much blacker I think you can feel assured that your property will continue to earn you a fair return during the current year and I have every hope that you need suffer no serious diminution in dividends. To secure that object, we are prepared to reduce every item of expenditure to the very barest minimum compatible with not injuring the future of the property.

I regret that, as much as I should like to do so, again I cannot ask you to sanction a bonus to the staff at the Collieries, and I can only trust that a revival of trade will before so very long allow us to resume our old custom of giving some tangible expression of our appreciation of the good work performed by all at Batu Arang. Your General Managers inform me that they especially wish to mention the loyal and indefatigable assistance which they have received from Mr. Brailsford, the Mine Manager, and also from the Chief Engineer, Mr. Tooms, not only for his services on the Colliery, but also for the work which he put in on the Company's behalf while on leave.

His Excellency the High Commissioner accompanied by the Acting Chief Secretary, the Hon. Mr. A. Caldecott, C.B.E., the late British Resident of Selangor, the Hon. Mr. J. W. Simmons, and the General Manager of Railways, the Hon. Mr. J. Strachan, honoured your Company with a visit last January to Batu Arang, visiting the brick and plywood departments and descending the East Mine. We were glad to have the privilege of showing His Excellency round your property and you will be gratified to learn that His Excellency, and also the Chief Secretary and the others of the party, showed the keenest interest in your undertaking.

At our last meeting Mr. Ferrers owing to illness was unfortunately prevented from being present, and while I am glad to be able to tell you that he is now infinitely better than he was, I am sorry to say that at the end of the year he was still not as fit as we should have liked to have seen him. Mr. Ferrers, accordingly, regretfully tendered his resignation from the Board. We all hope, however, that under medical care he will soon be restored to complete health.

Mr. Kelman proceeded to England towards the end of the year, and the Board elected as his alternate during his temporary absence his colleague Mr. Robert John Turnbull of Malayan Tin Dredging Co., Ltd., whom we have with us this morning.

I will now formally propose that the Balance Sheet and Accounts to 31st December, 1931, and the Reports of the Directors and Auditors be received and adopted, which resolution I will ask Mr. Martin to second; but before I put the same to the meeting 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 7 ½ % was unanimously approved on the motion of the Chairman seconded by Mr.  F.  Cunningham.

The Directors remuneration of $20,000 for the past year was carried on the proposal of the Chairman seconded by Mr. R. J. Turnbull.

Messrs. A. J. Kelman and H. H. Robbins, being the Directors longest in office, retired under the provision of the Articles of Association, but being eligible, offered themselves for re-election. Mr. A. J. Kelman was re-elected a Director on the proposal of the Chairman seconded by Mr. H. H. Robbins. Mr. H. H. Robbins was re-elected a Director on the proposal of the Chairman seconded by Mr. W. H. Martin. Mr. W. G. C. Blunn proposed and Mr. C. Norman Bennett seconded that Messrs. Evatt & Co. be re-elected Auditors for the ensuing year.

The Meeting terminated with a vote of thanks to the Chair.

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