Report of the Directors (Continued)
China Motor Bus General Monthly Rated Staff Retirement Scheme
(a)
(i)
The market value of the scheme assets as at 30th June, 1997 was HK$11,363,000.
(ii) The funding level of the scheme was 71%.
(iii) The solvency basis funding deficiency in the scheme was HK$646,000 and the on-going funding basis deficiency excluding
the above solvency deficiency was HK$3,921,000.
China Motor Bus Retirement Scheme
(b)
(i)
The market value of the scheme assets as at 30th June, 1997 was HK$163,694,000.
(ii) The funding level of the scheme was 60%.
(iii) The solvency basis funding deficiency in the scheme was HK$50,832,000 and the on-going funding basis deficiency
excluding the above solvency deficiency was HK$57,734,000.
China Motor Bus Senior Executives Retirement Scheme
(c)
(i)
The market value of the scheme assets as at 30th June, 1997 was HK$13,542,000.
(ii) The funding level of the scheme was 90%.
(iii) The solvency basis funding surplus in the scheme was HK$16,000 and the on-going funding basis deficiency was
HK$1,454,000.
COMMENTARY ON ANNUAL RESULTS
Revenue and Operating Profit
Revenue of the Company for the year under review increased to HK$833 million from HK$773 million in the previous year. The main cause of this increase was the full year impact of fare rise with effect from 3rd March, 1996 and the improvement of operating efficiency. The operating profit of the Group for the year under review increased to HK$68 million from HK$64 million in the previous year. The increase of operating profit was mainly due to the increase in revenue which was partially offset by increase in costs due to inflationary pressure as well as the improvement of retirement benefit with effect from 1st January, 1997.
The Group had 2,375 employees at the end of the year. An average pay rise of 7.8% was granted to all daily-rated employees and an average 7% to all monthly-rated employees with effect from 1st July, 1996.
Liquidity and Financial Resources
For the year under review, net cash flow from operating activities was HK$52 million (1996: HK$45 million). Total dividends paid to shareholders during the year amounted HK$242 million (1996: HK$77 million). Payment for capital investment amounted to HK$54 million (1996: HK$51 million). The cash flow statement for the Group for the year ended 30th June, 1997 is set out on pages 18 and 19 of this annual report.
At 30th June, 1997, the Group had no bank borrowing and had cash and cash equivalents of HK$1,064 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$54 million, of which HK$51 million was for the purchase of buses, HK$1 million for plant, fixtures and equipment and HK$2 million for buildings.
At 30th June, 1997, the Group had placed orders for fourteen three-axle, air-conditioned double-decked buses amounting to HK$26 million and was authorized to purchase some residential units amounting to HK$41 million for investment purposes. Capital commitments outstanding and not provided for in the accounts at 30th June, 1997 amounted to HK$67 million.
7