1995 — Page 114

NOTES ON THE ACCOUNTS

1. SIGNIFICANT ACCOUNTING POLICIES

a.

Basis of consolidation

b.

No consolidated accounts are prepared as the result and net worth of the Company's subsidiary are considered by the Directors to be immaterial to the Group.

Revenue recognition

(i)

Fare receipts are recognised when the relevant bus services are provided.

(ii) Advertising revenue is recognised when the related advertisement or

commercial appears before the public.

(iii) Interest income from bank deposits is accrued on a time proportion basis on the

principal outstanding and at the rate applicable.

C. Translation of foreign currencies

Foreign currency loans for purchases of buses and equipment which are hedged by forward foreign exchange contracts taken out with the lender are stated at the appropriate contracted rates of exchange. With this exception, foreign currency balances at the year end are translated into Hong Kong dollars at the rates of exchange ruling at the balance sheet date and foreign currency transactions during the year are translated into Hong Kong dollars at the rates of exchange ruling at the transaction dates. Differences on foreign currency translation are taken to the profit and loss account.

d.

Spare parts and stores

Spare parts and stores are valued at cost less provision.

Cost includes cost of purchases of materials, direct labour and an appropriate proportion of overheads.

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