1996 — Page 120

Notes on the Accounts

1 SIGNIFICANT ACCOUNTING POLICIES

(a)

(b)

These accounts have been prepared in accordance with Hong Kong Statements of Standard Accounting Practice, accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. A summary of the significant accounting policies is set out below.

Basis of consolidation

The consolidated accounts include the accounts of the company and its subsidiary made up to 31 December each year. The results of subsidiaries acquired or disposed of during the year are included in the consolidated profit and loss account from or to the date of their acquisition or disposal, as appropriate. All material intercompany transactions and balances are eliminated on consolidation.

In 1995, no consolidated accounts were prepared as the result and net worth of the subsidiary were considered by the Directors to be immaterial to the Group. The amounts shown for 1995 represent, in all material respects, the comparatives for both the Group's and the Company's accounts.

(c) Investment in subsidiary

Investment in subsidiary in the Company's balance sheet is stated at cost less any provision for permanent diminution in value as determined by the Directors.

(d) Associated companies

The consolidated profit and loss account includes the Group's share of the post-acquisition results of its associated companies for the year. In the consolidated balance sheet, investments in associated companies are stated at the Group's share of their net assets.

The results of associated companies are included in the Company's profit and loss account to the extent of dividends received and receivable, providing the dividend is in respect of a period ending on or before that of the Company and the Company's right to receive the dividend is established before the accounts of the Company are approved by the Directors. In the Company's balance sheet, investments in associated companies are stated at cost less any provision for permanent diminution in value as determined by the Directors.

Revenue recognition

(e)

(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.

47

Page 120Page 121