[Dear Hester,]
12th July 1973
(162)
Hong Kong Mass Transit System
I write to confirm what I said to you on the telephone yesterday following your meeting to discuss the method of calculating the subsidy element. Peter Burman's people have had another look at this. I am afraid there has been a misunderstanding over the capitalisation of interest and he agrees that it would be logical to omit it from both sides of the calculation and to discount the outward and inward cash flows only. This affects the calculations
dono da Maxchi, as well as the recent ones
Also, unfortunately, in the latest E.C.G.D. Xerox schedule, the first loan drawing was very faint and was omitted from the calculation in error. This considerably affects the estimates given in Michael Lambert's letters of 5th and 6th July.
The revised figures are as follows:
(a)
Present value of loon
(b)
Present value of receipts
(HK$ uns.)
Subsidy to U.K. exports
Letter of 16th March
Proposal 1
1,722.22
1,303.67
24.3% (same)
Proposal 2
1,722.22
1,269.40
26.3%
Proposal 3
1,722.22
1,240.26
28.0%
Letters of 5th and 6th July
1. Without capitalised
interest
2,409.6
1,859.8
22.8%
2. With capitalised
interest
2,409.6
1.776.6
26.3%
(a) minus (b) as a percentage of (a)
These calculations assume 100% U.K. contant of exports. If there vere to be a foreign content element, the subsidy to U.K. exports would be correspondingly greater.
Those concerned here apologise for the inconvenience caused by these revisiona.