CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 1999
Note 1999 1998 HK$'000 HK$'000 Turnover 5,871,202 5,510,365 Other revenue 140,599 79,023 Other net income 3,945 10,530 Staff costs (3,049,001) (3,107,698) Depreciation (531,855) (452,259) Spare parts and stores consumed (625,510) (587,858) Other operating expenses (769,499) (625,810) ---------- ---------- Profit from operations 1,039,881 826,293 Finance cost (147,640) (147,612) Share of profit of associate -- -- Share of profit/(loss) of jointly controlled entity 293 (52) ---------- ---------- Profit from ordinary activities before taxation 892,534 678,629 Taxation 2 (153,656) (92,754) ---------- ---------- Profit from ordinary activities after taxation 738,878 585,875 Minority interests (272) (425) ---------- ---------- Profit attributable to shareholders 738,606 585,450 ========== ========== Earnings per share 3 $1.83 $1.45 ========== ==========
1. Basis of consolidation
The consolidated accounts include the accounts of the Company and all its subsidiaries 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.
Hong Kong Profits Tax has been provided at the rate of 16% (1998 - 16% ) on the estimated assessable profits for the year. Deferred taxation is provided using the liability method in respect of the taxation effect arising from all material timing differences between the accounting and tax treatment of income and expenditure, which are expected with reasonable probability to crystallise in the foreseeable future. Future deferred tax benefits are not recognised unless their realisation is assured beyond reasonable doubt.
3. Earnings per share
The calculation of earnings per share is based on the profit attributable to shareholders of HK$738,606,000 (1998: HK$585,450,000) and 403,639,413 shares in issue during the two years.
4. Comparative figures
The presentation and classification of items in the accounts have been changed due to the adoption of the requirements of SSAP 1 (revised) "Presentation of financial statements". As a result, additional line items have been included on the face of the consolidated profit and loss account as required by SSAP 1 (revised). Comparative figures have been reclassified to conform with the current year's presentation.
The Group's profit attributable to shareholders for the year ended 31 December 1999 was HK$738.6 million, representing an increase of 26.2% over the HK$585.5 million for the previous year. Earnings per share for the year amounted to HK$1.83 compared with HK$1.45 the year earlier.
The Group's results were mainly derived from the operation of franchised bus services. The profit from the franchised bus operations, i.e. The Kowloon Motor Bus Company (1933) Limited and Long Win Bus Company Limited, for the year amounted to HK$704.3 million, an increase of 23.3% over the HK$571.4 million for 1998.
At the forthcoming Annual General Meeting to be held on 15 June 2000, the Directors will recommend the payment to shareholders registered on that date a final dividend of HK$1.07 per share (1998 - 88 cents per share), totalling HK$431.9 million (1998 - HK$355.2 million), for the year ended 31 December 1999. Together with the interim dividend of 28 cents per share (1998 - 27 cents per share) paid on 5 October 1999, total dividend for the year ended 31 December 1999 will amount to HK$1.35 per share (1998 - HK$1.15 per share), totalling HK$544.9 million (1998 - HK$464.2 million). Subject to the approval of shareholders at the forthcoming Annual General Meeting, the final dividend will be payable on 16 June 2000.
The Transfer Books of the Company will be closed from 5 June 2000 to 15 June 2000, both dates inclusive. To qualify for the proposed final dividend, transfers must be lodged with the Company's Share Registrars, Central Registration Hong Kong Limited of 17th Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong by not later than 4:00 p.m. on 2 June 2000.
The Kowloon Motor Bus Company (1933) Limited ("KMB")
The profit from the franchised bus operations of KMB for the year amounted to HK$743.0 million (1998 - HK$598.4 million), representing an increase of 24.2% over the previous year.
KMB recorded 1,060.0 million passenger trips during the year (1998 - 1,034.4 million). The daily average number of passenger trips in 1999 was 2.90 million (1998 - 2.83 million). This represents an increase of 2.5% in the number of passenger trips as compared with the previous year. The actual distance travelled by KMB's buses totalled 315.4 million kilometres during 1999 (1998 - 302.5 million kilometres). The increase was primarily due to the launch of 17 new routes and improved frequencies on certain routes.
Revenue and operating costs related to KMB's franchised bus operations increased by 5.3% and 3.0%, respectively, as compared with the previous year. The increase in revenue was mainly due to the increase in passenger volume, the introduction of more air-conditioned buses and new routes. The increase in operating costs was mainly due to the increased level of bus services and additional costs incurred for enhancement of the quality of service.
During 1999, a total of 240 new three-axle air-conditioned double-deck buses were introduced by KMB, increasing the number of air-conditioned buses to 2,355 from 2,115. Of these, 2,090 are double-deck and 265 are single-deck buses. At year end 1999, air-conditioned buses represented 58% of KMB's total fleet which numbered 4,078 buses.
By the end of 1999, KMB operated a total of 397 bus routes serving urban Kowloon, the 12 new towns of North District, Kwai Chung, Ma On Shan, Sai Kung, Sha Tin, Tai Po, Tin Shui Wai, Tseung Kwan O, Tsing Yi, Tsuen Wan, Tuen Mun and Yuen Long in the New Territories as well as cross-harbour services to Hong Kong Island.
Long Win Bus Company Limited ("LWB")
LWB recorded a loss of HK$38.7 million in 1999 (1998 - a loss of HK$ 27.1 million). The total ridership of LWB for the year under review was 16.9 million (1998 - 14.4 million) passenger trips or a daily average of 46,300 (1998 - 39,500). This represents an increase of 17.2% over the previous year. The increase was primarily due to the full year operation of LWB's route network. Total mileage operated for the year was 23.3 million (1998 - 15.0 million) kilometres.
During 1999, LWB entered a year of consolidation and rationalisation of its route network. The sluggish market environment for North Lantau and the Airport prevailed throughout the year and competition from both the rail and non-franchised bus operators was intense. At the end of 1999, LWB operated 15 bus routes with a fleet of 159 air-conditioned buses, of which 149 were double-deck buses and 10 were single-deck buses. The service area of LWB was extended to cover North District and Ma On Shan.
With the Government's comprehensive development plans for Tung Chung New Town and North Lantau, LWB is well placed to cater for future demand through its continued commitment to the provision of safe, efficient, comfortable and high quality transport.
Non-franchised Bus Service
The Non-Franchised Transport Operations Division of the Group became profitable in 1999. This is an encouraging improvement when compared with the small loss made in 1998. The improved results were mainly attributable to the further expansion of Sun Bus Limited and the acquisition of a non-franchised local bus company, Chomang Travel Transport Company Limited, in August 1999 which brought about higher economies of scale and an increased customer base. At year end, these two companies operated 87 buses providing residential, commercial and employee bus services in urban and sub-urban areas.
Associate and Jointly Controlled Entity
At 31 December 1999, the Group's total interest in associate and jointly controlled entity amounted to HK$8.2 million (1998 - HK$11.9 million). The investments were in respect of the operation of a cross-boundary bus transport service between Lok Ma Chau and Huanggang and three bus routes in Dalian, China, both of which started operations in 1997. Contributions from these bus operations to the Group were insignificant during the year.
Year 2000 Issue
The transition to the Year 2000 was smooth and seamless. Recognising that the Group's computer systems might be affected before, during or after the New Year, the management adopted the conformity requirements issued by the British Standards Institution for Year 2000 compliance. A Year 2000 compliance programme was implemented to address all critical areas. These included all relevant computer systems, applications and equipment with embedded systems and involved impact analysis, risk assessment and rigorous testing. Also, our business partners and major suppliers were asked for assurances that the Group would not be exposed to risk arising from any Year 2000 non-compliance on their part. A project team led by a Year 2000 co-ordinator closely monitored the programme and provided progress reports to the management on a regular basis. All systems and equipment that had not been Year 2000 compliant were converted and contingency plans were developed to minimise any possible disruption to our operations and services. In addition, the Group's readiness was independently reviewed by an external consultant. At the turn of the year and on 29 February 2000, there were no Year 2000 related incidents. The aggregate costs for the programme did not have a significant effect on the Group's operating results and, as at 31 December 1999, there were no outstanding commitments in respect of the Year 2000 modifications.
Purchase, Sale or Redemption of the Company's Listed Shares
During the year under review, the Company and its subsidiaries did not purchase, sell or redeem any of the Company's own shares.
Compliance with the Code of Best Practice
None of the Directors of the Company is aware of information which would reasonably indicate that the Company is or was at any time during the year ended 31 December 1999, not in compliance with the Code of Best Practice as set out in Appendix 14 to the Rules Governing the Listing of Securities of The Stock Exchange of Hong Kong Limited, except that the independent Non-executive Directors of the Company are not appointed for a specific term but are subject to retirement by rotation and re-election at the Annual General Meeting in accordance with the Bye-laws of the Company.
By Order of the Board
Hong Kong, 13 April 2000
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