Report of the Directors (Continued)
(a) China Motor Bus Company Limited General Monthly Rated Staff Retirement Scheme
The market value of the scheme assets as at 30th June, 1996 was HK$8,695,000.
(i)
(ii) The funding level of the scheme was 64%.
(iii) The solvency basis funding deficiency in the scheme was HK$1,990,000 and the on-going funding basis deficiency excluding
the above solvency deficiency was HK$2,947,000.
China Motor Bus Company Limited Retirement Scheme
(b)
(i)
The market value of the scheme assets as at 30th June, 1996 was HK$116,011,000.
(ii) The funding level of the scheme was 56%.
(iii) The solvency basis funding deficiency in the scheme was HK$45,397,000 and the on-going funding basis deficiency
excluding the above solvency deficiency was HK$45,635,000.
China Motor Bus Company Limited Senior Executives Retirement Scheme
(c)
(i)
The market value of the scheme assets as at 30th June, 1996 was HK$11,948,000.
(ii) The funding level of the scheme was 91%.
(iii) The solvency basis funding deficiency in the scheme was HK$371,000 and the on-going funding basis deficiency excluding
the above solvency deficiency was HK$813,000.
COMMENTARY ON ANNUAL RESULTS
Revenue and Operating Profit
Revenue of the Company for the year under review decreased to HK$773 million from HK$785 million in the previous year. The main cause for this reduction was the withdrawal of 14 routes from the Company's network on 31st August, 1995. The operating profit of the Group for the under review decreased to HK$64 million from HK$122 million in the previous year. The decrease of operating profit was mainly due to the increase in costs due to inflationary pressure such as salaries and wages, spare parts and other operating costs.
year
The Group had 2,378 employees at the end of the year. An average pay rise of 9.5% was granted to all daily-rated employees and an average 7% to all monthly-rated employees with effect from 1st July, 1995.
Liquidity and Financial Resources
For the year under review, net cash flow from operating activities was HK$45 million (1995: HK$66 million). Total dividends paid to shareholders during the year amounted HK$77 million (1995: HK$85 million). Payment for capital investment amounted to HK$51 million (1995: HK$24 million). The cash flow statement for the Group for the year ended 30th June, 1996 is set out on pages 18 and 19 of this annual report.
At 30th June, 1996, the Group had no bank borrowing and had cash and cash equivalents of HK$826 million which were held in the form of short term deposits or cash at banks.
Capital Expenditure and Commitments
Capital expenditure incurred during the year amounted to HK$51 million, of which HK$50 million was for the purchase of buses and HK$1 million for plant, fixtures and equipment.
At 30th June, 1996, the Company had placed orders for ten three-axle, air-conditioned double-decked buses. Capital commitments outstanding and not provided for in the accounts at 30th June, 1996 amounted to HK$16 million. A further order of six three-axle, air- conditioned double-decked buses was placed after the balance sheet date.
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