1999 — Page 35

Notes on the Accounts

Hong Kong Ferry (Holdings) Co. Ltd.

33

1. PRINCIPAL ACCOUNTING POLICIES

(e) Revenue recognition

(ii) Sale of goods

Revenue is recognised when goods are delivered to customers. This is taken to be the point in time when the customers have accepted the goods and the related risks and

rewards of ownership.

(iii) Rental income

Rental in respect of properties is recognised on an accrual basis evenly over the periods of the respective tenancies.

(iv) Travel business

Revenue arising from the travel business is recognised on the completion date of the tours or when the relevant services are provided.

(v) Interest income

Interest income from bank deposits is accrued on a time-apportioned basis on the principal outstanding and at the rate applicable.

(vi) Dividends

Dividend income from listed investments is recognised when the share price goes ex-

dividend.

(f) Investment properties

Investment properties are stated in the balance sheet at their open market value which is assessed annually by qualified valuers. Surpluses arising on revaluation are credited to the investment property revaluation reserve; deficits arising on revaluation are firstly set off against any previous revaluation surpluses and thereafter taken to the profit and loss account. The related portion of surpluses or deficits previously taken to the investment property revaluation reserve is dealt with in the profit and loss account on disposal. When an investment property is substantially ready for redevelopment, it is reclassified as properties under development and any revaluation surplus relating thereto transferred to "other property revaluation reserve".

No depreciation is provided in respect of investment properties with an unexpired lease term of over 20 years since the valuation takes into account the state of each property at the

date of valuation.

Page 35Page 36

34