TNAG-0635-FCO40-783-Supplies-of-electricity-for-Hong-Kong-1977 — Page 101

Arnex F

FINANCIAL PROJECTIONS

The anticipated future financial position of the Company, given that the growth and related assumptions (below) prove to be reasonably accurate, is presented overleaf (Schedules 1 - 5) in the form of financial statements covering Profit, Balance Sheet and

Cash Flow Frojections.

Particular attention though is drawn to revenue estimates since these have been used as balancing figures for cash shortfalls.

In other words tariffs have been increased to the level necessary

to finance the capital éxpansion after making full allowance for borrowings, retained earnings and other sources of funds. Accordingly the anticipated tariff increases shown on Schedule (1)

should be looked at on an overall basis since in practise any

necessary increase would be smoothed out as much as possible.

Main Assumptions

(a) Growth as presented in paras.

w

(b) Capital expenditure escalation of &;

(c) Permitted Return 13% of ANFA;

(d) Depreciation

4

straight line basis;

(e) No further investment by ECSO;

(f) Maximum use of export credit terms;

1

(g) Dividends increasing by 10% per annum;

(h) Tax equalisation account introduced;

(i) All interest on capital equipment capitalised;

(j) Profits Tax 17%;

(k) Overdraft interest 9.