1995 — Page 80

CHAIRMAN'S STATEMENT

Results

I am pleased to report that the Company's profit attributable to Shareholders for the financial year ended 31 December 1995 was HK$461.1 million. This compared to HK$2,116.8 million for the year ended 31 December 1994 which included an exceptional item of HK$1,710.8 million arising from the disposal of two surplus depot sites. The profit from franchised bus operations for the year, after the transfer of HK$2 million (1994 - HK$Nil) to the Development Fund, amounted to HK$461.1 million (1994 - HK$406 million), representing an increase of 13.6 per cent over that for 1994. Earnings per share for the year amounted to HK$1.14 (1994 - HK$5.24, or HK$1.01 before exceptional item).

The Company's bus operating profit for the year exceeded the permitted return by HK$2 million. In 1994, it fell short of the permitted return by HK$1.6 million. The accumulated shortfall brought forward from previous years was HK$44.4 million. Subject to the Government's agreement, the shortfall is recoverable from the Development Fund in future years.

The Scheme of Control Profit, after the deduction of the HK$12 million contribution to the Elderly. Concessions Scheme and the transfer of HK$2 million to the Development Fund, represents a return of 15.6 per cent on the 1995 average net fixed assets value for the Scheme of Control purposes. Under the existing basis of calculation of the permitted return, leasehold land of the Company for the Scheme of Control purposes is stated either at cost or, if acquired before 1 July 1959, at its 1959 valuation.

According to reports prepared by professional valuers, if the same leasehold land had been valued at its open market valuation or depreciated replacement cost, as appropriate, as at 1 March 1996, the return would have become approximately 5.8 per cent.

Dividends

At the forthcoming Ordinary Yearly Meeting, the Directors will recommend the payment of a final dividend of 69 cents per share for the year ended 31 December 1995 (1994 - 60 cents per share). Together with the interim dividend of 22 cents per share paid on 12 October 1995 (1994 - 20 cents per share), dividends for the year ended 31 December 1995 will amount to 91 cents per share, totalling HK$367.3 million (1994 - HK$322.9 million).

Fare Increase

On 2 April 1995, the Company increased its fares (except those on cross harbour routes) by an overall average of 7 per cent. The increase granted was lower than that originally proposed by the Company (8.4 per cent). The Company has tried its best to continue to increase its productivity and to improve the quality of its service to counter the effects of rising operating costs due to inflation and the reduction in anticipated revenue as a result of the scaling down of the proposed fare increase. These efforts, coupled with some improvements in operating conditions (e.g. the introduction of more bus priority schemes), have brought about an increase in ridership in 1995 and enabled the Company to achieve slightly more than the permitted return.

THE KOWLOON MOTOR BUS COMPANY (1933) LIMITED

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