1.—7

64

Ebpoet and Accounts of the Debectoks for the Half-year ended 31st December, 1891, to be submitted to the Thirty-seventh Ordinary General Meeting, 4th May, 1892. 1. The usual statements of account for the half-year ended the 31st December, 1891, are submitted herewith. 2. The gross receipts, including Government subsidies, have amounted during the half-year to £243,658 Bs. 10d., against £279,095 Is. for the corresponding period of 1890. In the latter figures, however, £8,031 was included for profit on exchange, whereas a loss of £3,232 has been experienced during the past half-year, in addition to which the receipts have been diminished by the reduction of rates to Australia, to which further reference is made below. 3. The working and other expenses, including £22,091 17s. 6d. for cost of repairs to cables and expenses of ships, absorb £74,314 9s. 5d., against £74,090 3s. 2d. for the corresponding period of 1890, leaving a balance of £169,343 19s. sd. From this is deducted £3,092 2s. 10d. for incometax, and £31,895 for interest on debentures, debenture stock, and contribution to sinking fund, leaving as the net profit for the half-year £134,356 16s. 7d. Against this £2,535 4s. has been charged for special expenditure, as shown in the Revenue Account, leaving a balance of £131,821 12s. 7d., which, with £92,665 9s. 7d. brought forward, shows an available balance of £224,487 2s. 2d. 4. One quarterly interim dividend of 1J per cent, has been paid for the half-year, and it is now proposed to distribute another of like amount, making, with the interim dividends paid for the first half-year, a total dividend of 5 per cent. It is also proposed to pay a bonus of 4s. per share, or 2 per cent., making a total distribution of 7 per cent, for the year 1891. The balance of £111,987 2s. 2d. has been carried to the General Reserve Fund, which, after being credited with interest and debited with £191,163 2s. 4d. on account of the cable expenditure specified under the heading " General Eeserve J?und," now stands at £428,842 7s. 4d. 5. In accordance with the provisions of the trust deed dated the 15th May, 1879, 337 of the company's 5-per-cent. Australian Government subsidy debentures, amounting to £33,700, were drawn by lot on the 4th instant, for payment at par on the Ist July next. The numbers of the drawn debentures are given at the end of this report. 6. The "guarantee" arrangement made with certain of the Australasian Governments for testing the effect of a four-shilling rate to Australia has now been in operation for eleven months, with the result that the number of words transmitted has increased 48 per cent, over the corresponding period of 1890 and 60 per cent, over that of 1889, the year taken as the basis of the " guarantee," while the revenue has diminished at the rate of £55,000 per annum. By the terms of the agreement one-half of the loss is borne by the guaranteeing colonies, and the other half by the associated companies and the Indo-European Department of Her Majesty's Indian Government, according to their respective interests in the Australasian traffic. As the experiment, as far as it has gone, is considered not unsatisfactory, it has been decided to continue it for another year. 7. Numerous interruptions have occurred on the company's system during the past half-year, but, owing to most of the cables being duplicated, the traffic has not been materially affected, except with Manila, which was, unfortunately, cut off from telegraphic communication for several weeks, the cable between Hongkong and Cape Bolinao having broken at each end of the line during a severe typhoon. Negotiations have since been entered into with the Spanish Government for the duplication of the cable, and it is hoped that a satisfactory arrangement may be shortly brought about. All the cables are now in good working-order. 8. During the half-year under review the company's system has been extended to Sumatra, in accordance with the arrangement concluded with the Netherlands Government, and referred to in the last report. The cable for this connection was taken from the company's stock at Singapore, and the cost of the operation (£14,924) has been debited to the reserve fund. A contract has also been entered into with the Netherlands-Indian Government for the manufacture and laying, on account of the Government, of a submarine cable to connect Acheen with the company's system at Sumatra, and an arrangement has been made with the Telegraph Construction and Maintenance Company for carrying out the work. 9. The shareholders having at the last meeting approved- the principle of establishing a staff pension fund, your directors are having the details worked out by experienced actuaries, and a scheme will be submitted to the meeting for dealing with the matter, together with a formal resolution empowering the directors to carry out the necessary arrangements. 10. In accordance with the articles of association, John Denison Pender, Esq., and the Most Honourable the Marquis of Tweeddale retire by rotation, and, being eligible, offer themselves for re-election. 11. The retiring auditors, Mr. Henry Dever and Messrs. Welton, Jones, and Co., also offer themselves for re-election. John Pendbe, Chairman. . Winchester House, 50, Old Broad Street, London, E.C., .21st April, 1892.