Annual Report 2020

2020 Annual Report Transport International Holdings Limited 189 Notes to the Financial Statements (Expressed in Hong Kong dollars unless otherwise indicated) 5 Profit before taxation (continued) 2020 2019 $’ 000 $’ 000 (d) Other items Depreciation# – owned property, plant and equipment 986,659 960,598 – right-of-use assets 6,554 6,009 (Write-back)/write-down of spare parts (17) 725 Provision for passenger reward (note a) – 6,834 Provision for toll exemption fund (note b) 193,730 195,782 Auditors’ remuneration – audit services 4,170 4,203 – other services 1,090 884 Note a: Under the revised Modified Basket of Factors (“MBOF”) approach, which is the existing basis for the assessment of bus fare adjustment applications, 50% of any return on a franchised bus operator in a given year in excess of a prescribed triggering point of return on its average net interest in leasehold land and other property, plant and equipment is required to be set aside and accumulated in a balance of passenger reward, which would be available to relieve the pressure for future fare increases and to facilitate the offer of bus fare concessions. The prescribed triggering point of return for 2020 and 2019 was 8.7% per annum. The balance of passenger reward of the Group as at 31 December 2020, included in accounts payable and accruals (note 25), was $7,154,000 (2019: $12,375,000). Note b: The HKSAR Government announced that with effect from 17 February 2019, all franchised buses are exempted from paying toll when using the Government tunnels and roads. However, each franchised bus operator is required to spend an equivalent amount of the toll saved to set up its own dedicated account known as the “Toll Exemption Fund” in which the fund will normally be used to lower the magnitude of future fare increases. In addition, any additional fare revenue resulting from the increase of the bus fare on the jointly operated routes with other franchised bus operators arising from a fare adjustment is required to be paid into the Toll Exemption Fund. The provision for Toll Exemption Fund is included in “Other operating expense” in the consolidated statement of profit or loss. The balance of Toll Exemption Fund of the Group as at 31 December 2020, included in accounts payable and accruals (note 25), was $392,863,000 (2019: $196,354,000). #: Cost of mask production includes depreciation of $194,000 in 2020, which amount is included in the total amount disclosed in note 5(d) for depreciation.