4.1.5
5
(a) The after tax rate of return on average net
fixed assets (ANFA) employed in operating the
business ranges from 15% to 18%.
(b)
(c)
ANFA are based upon the historic cost accounting
convention and exclude assets under
construction.
A profit equalisation account (usually referred
a development fund) is used as a means of
carry-forward of over or under earning of
to as
profit.
(d)
Interest charged is not deducted as an expense
in the assessment of net profit for profit
limitation purposes.*
(e) Interest earned from the investment of surplus
funds is excluded from the profit limitation.*
The results of applying the general principles of
profit limitation imposed by HKG on certain public
utility companies for a range of limits between 15%
and 18% with effect from 1.4.87 are summarised in
Table 1 below.
*
Certain schemes count interest in excess of a
specified rate in profit limitation calculations