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The Kowloon Motor Bus Holdings Limited


Notes on the Accounts

Note: [1] [2] [3] [4] [5] [6]

1.  SIGNIFICANT ACCOUNTING POLICIES

  1. These accounts have been prepared in accordance with Hong Kong Statements of Standard Accounting Practice, accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. A summary of the significant accounting policies is set out below.

  2. Basis of consolidation

    The consolidated accounts include the accounts of the company and its subsidiary made up to 31 December each year. The results of subsidiaries acquired or disposed of during the year are included in the consolidated profit and loss account from or to the date of their acquisition or disposal, as appropriate. All material intercompany transactions and balances are eliminated on consolidation.

    In 1995, no consolidated accounts were prepared as the result and net worth of the subsidiary were considered by the Directors to be immaterial to the Group. The amounts shown for 1995 represent, in all material respects, the comparatives for both the Group's and the Company's accounts.

  3. Investment in subsidiary

    Investment in subsidiary in the Company's balance sheet is stated at cost less any provision for permanent diminution in value as determined by the Directors.

  4. Associated companies

    The consolidated profit and loss account includes the Group's share of the post-acquisition results of its associated companies for the year. In the consolidated balance sheet, investments in associated companies are stated at the Group's share of their net assets.

    The results of associated companies are included in the Company's profit and loss account to the extent of dividends received and receivable, providing the dividend is in respect of a period ending on or before that of the Company and the Company's right to receive the dividend is established before the accounts of the Company are approved by the Directors. In the Company's balance sheet, investments in associated companies are stated at cost less any provision for permanent diminution in value as determined by the Directors.

  5. Revenue recognition

    1. Fare receipts are recognised when the relevant bus services are provided.

    2. Advertising revenue is recognised when the related advertisement or commercial appears before the public.

    3. Interest income from bank deposits is accrued on a time proportion basis on the principal outstanding and at the rate applicable.

  6. Translation of foreign currencies

    Foreign currency loans for purchases of buses and equipment which are hedged by forward foreign exchange contracts taken out with the lender are stated at the appropriate contracted rates of exchange. With this exception, foreign currency balances at the year end are translated into Hong Kong dollars at the rates of exchange ruling at the balance sheet date and foreign currency transactions during the year are translated into Hong Kong dollars at the rates of exchange ruling at the transaction dates. Differences on foreign currency translation are taken to the profit and loss account.

  7. Spare parts and stores

    Spare parts and stores are valued at cost less provision.

    Cost includes cost of purchases of materials, direct labour and an appropriate proportion of overheads.

  8. Amortisation and depreciation

    Amortisation and depreciation is provided at rates calculated to write off the cost or valuation of fixed assets over their estimated useful lives as follows:

    Leasehold landOver the terms of the leases
    Buildings50 years or over the term of the lease
      including extension or renewal period
      whichever is less
    New buses7 1/7% p.a. on cost
    Light duty coaches and other motor vehicles16 2/3% p.a. on cost
    Plant and machinery, lifts, fixtures and equipment14 2/7% p.a. on cost
    Tools50% p.a. on reducing balance
    Computer equipment20% p.a. on cost

  9. Leased assets

    Payments under operating leases are charged to the profit and loss account on a straight line basis over the periods of the respective leases.

  10. Deferred taxation

    Deferred taxation is provided using the liability method in respect of the taxation effect arising from all timing differences which are expected with reasonable probability to crystallise in the foreseeable future.

2. TURNOVER


3. OPERATING PROFIT


4. DIRECTORS' REMUNERATION



5. MANAGEMENT REMUNERATION



6. TAXATION



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