2000 1999
Note HK$'000 HK$'000
Turnover 2 6,323,392 5,871,202
Other revenue 3 171,851 140,599
Other net income 3 2,832 3,945
Staff costs (3,128,689) (3,049,001)
Depreciation (600,370) (531,855)
Spare parts, stores and fuel oil consumed (830,579) (625,510)
Other operating expenses (822,008) (769,499)
---------- ----------
Profit from operations 1,116,429 1,039,881
Finance cost 4 (180,236) (147,640)
Share of profit of associates -- --
Share of profit of jointly controlled entity 286 293
---------- ----------
Profit from ordinary activities
before taxation 4 936,479 892,534
Taxation 5 (81,379) (153,656)
---------- ----------
Profit from ordinary activities after
taxation 855,100 738,878
Minority interests (446) (272)
---------- ----------
Profit attributable to shareholders 854,654 738,606
========== ==========
Earnings per share 6 $2.12 $1.83
========== ==========
Notes:--
1. Basis of consolidation
The consolidated accounts include the accounts of the Company and all its subsidiaries made up to 31 December each year. The results of subsidiaries acquired or disposed of during the year are included in the consolidated profit and loss account from or to the date of their acquisition or disposal, as appropriate. All material intercompany transactions and balances are eliminated on consolidation.
2. Turnover
Turnover comprises fare revenue and media sales revenue from the operation of franchised and non-franchised bus services. The amount of each significant category of revenue recognised in turnover during the year is as follows:
2000 1999
HK$'000 HK$'000
Fare revenue from franchised bus services 6,129,661 5,762,426
Revenue from non-franchised bus services 102,677 57,973
Media sales revenue 91,054 50,803
---------- ----------
6,323,392 5,871,202
========== ==========
The Group's turnover and profit are almost entirely attributable to bus operations. Accordingly, no analysis by principal activity is provided. Turnover and contribution to the Group's profit from non-Hong Kong activities are insignificant.
3. Income
2000 1999
HK$'000 HK$'000
Other revenue
Interest income from bank deposits 138,842 95,708
Interest income from listed debt securities 263 5,611
Insurance claims received 25,963 30,848
Sundry revenue 6,783 8,432
---------- ----------
171,851 140,599
========== ==========
Other net income
Realised and unrealised gains on listed
securities carried at fair value 420 3,270
Loss on disposal of fixed assets (3,821) (6,261)
Net miscellaneous business receipts 6,233 6,936
---------- ----------
2,832 3,945
========== ==========
4. Profit from ordinary activities before taxation
Profit from ordinary activities before taxation is arrived at after charging:
2000 1999
HK$'000 HK$'000
(a) Finance cost:
Interest on bank loans and overdrafts 180,719 147,640
Less:Interest capitalised into buses
under construction (483) --
---------- ----------
180,236 147,640
========== ==========
(b) Other items:
Retirement costs included in staff costs
annual contributions to retirement schemes 164,418 164,548
Auditors' remuneration 1,654 1,316
Operating lease charges on temporary bus
depots and terminal shelters 1,357 2,656
========== ==========
5. Taxation
Taxation in the consolidated profit and loss account represents:
2000 1999
HK$'000 HK$'000
Provision for Hong Kong Profits Tax at 16% of the
estimated assessable profits for the year 88,429 118,689
Overprovision in respect of prior years (7,050) (121)
---------- ----------
81,379 118,568
Deferred taxation -- 35,000
---------- ----------
81,379 153,568
Share of jointly controlled entity's taxation -- 88
---------- ----------
81,379 153,656
========== ==========
Deferred taxation is provided using the liability method in respect of the taxation effect arising from all material timing differences between the accounting and tax treatment of income and expenditure, which are expected with reasonable probability to crystallise in the foreseeable future. Future deferred tax benefits are not recognised unless their realisation is assured beyond reasonable doubt.
6. Earnings per share
The calculation of earnings per share is based on the profit attributable to shareholders of HK$854,654,000 (1999: HK$738,606,000) and 403,639,413 shares in issue during the two years.
Results for the Year
The Group's profit attributable to Shareholders for the year ended 31 December 2000 was HK$854.7 million, representing an increase of 15.7% over the HK$738.6 million for the previous year. The profit was mainly derived from the franchised bus operations, i.e. The Kowloon Motor Bus Company (1933) Limited and Long Win Bus Company Limited, which amounted to HK$827.0 million, an increase of 17.4% over the HK$704.3 million for 1999. Earnings per share for the year were HK$2.12 compared with HK$1.83 for 1999.
Dividends
At the forthcoming Annual General Meeting to be held on 17 May 2001, the Directors will recommend the payment to shareholders registered on that date a final dividend of HK$1.25 per share (1999: HK$1.07 per share), totalling HK$504.5 million (1999: HK$431.9 million), for the year ended 31 December 2000. Together with the interim dividend of 33 cents per share (1999: 28 cents per share) paid on 10 October 2000, total dividend for the year ended 31 December 2000 will amount to HK$1.58 per share (1999: HK$1.35 per share), totalling HK$637.8 million (1999: HK$544.9 million). Subject to the approval of shareholders at the forthcoming Annual General Meeting, the final dividend will be payable on 18 May 2001.
The Transfer Books of the Company will be closed from 7 May 2001 to 17 May 2001, both dates inclusive. To qualify for the proposed final dividend, transfers must be lodged with the Company's share registrars, Central Registration Hong Kong Limited of 17th Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong by not later than 4:00 p.m. on 4 May 2001.
BUSINESS REVIEW
The Kowloon Motor Bus Company (1933) Limited ("KMB")
The profit from the franchised bus operations of KMB for the year amounted to HK$849.3 million (1999: HK$743.0 million), representing an increase of 14.3% over the previous year.
During 2000, KMB recorded 1,089.2 million (1999: 1,060.0 million) passenger trips. The daily average number of passenger trips in 2000 was 2.98 million (1999: 2.90 million). This represents an increase of 2.8% in the number of passenger trips as compared with the previous year. We attribute this passenger growth to several factors: the implementation of our strategy to retain our existing customers and attract new patrons by providing total customer satisfaction, the population growth of new towns and the recovery of the Hong Kong economy.
Revenue and operating costs related to KMB's franchised bus operations for the year 2000 increased by 6.8 % and 5.7 %, respectively, as compared with those of the previous year. The increase in revenue was due mainly to the increase in passenger volume, the introduction of more air-conditioned buses and new routes. The increase in operating costs was due primarily to increased fuel costs as a result of the surge in oil prices during the year and the increase in total mileage travelled by KMB's buses from 315.4 million kilometres in 1999 to 329.6 million kilometres in 2000, and additional costs incurred for service quality enhancement, such as the introduction of six new routes and improved frequencies on certain routes.
KMB continued to deploy additional air-conditioned buses to provide better quality services to passengers. During 2000, the number of air-conditioned buses increased by 298 (including addition of 313 double-deck buses and scrapping of 15 single-deck buses) from 2,355 to 2,653, comprising 2,403 double-deck and 250 single-deck buses. All the new air-conditioned double-deck buses have super-low floor for easy access. At year-end 2000, air-conditioned buses represented about 62% of KMB's total fleet of 4,247 buses (1999:4,078).
During 2000, six new routes were launched. Three of these were designed to meet the demand due to the rapid population growth in the New Territories, including the one introduced as a result of winning the tender in November 1999 for the right to operate bus routes for Tin Shui Wai North. The remaining three new routes were recreation service routes. At year-end 2000, KMB operated a total of 395 bus routes serving urban Kowloon, the New Territories as well as Hong Kong Island through its cross-harbour services.
Long Win Bus Company Limited ("LWB")
LWB recorded a loss of HK$22.3 million in 2000 (1999: a loss of HK$38.7 million). The total ridership of LWB for the year was 17.3 million (1999: 16.9 million) passenger trips or a daily average of 47,135 (1999: 46,300), representing an increase of 2.1% over the previous year. Such increase was mainly attributed to improved market conditions.
Following the consolidation and rationalisation of the bus network in 1999, LWB entered the millennium with a network of 15 routes and a peak hour allocation of 119 buses. While operating fewer buses than in the previous year which resulted in a reduction in the total mileage operated during 2000 by approximately 1% compared with the 23.3 million kilometres operated in 1999, the catchment of LWB's network was extended to cover North District and Ma On Shan. The sluggish market environment for North Lantau and the Airport began to improve slightly since mid-2000 due mainly to the population intake of the Tung Chung new town. As a result of the increased operation on the Airbus network, LWB upgraded seven of its conventional air-conditioned double-deck buses to Airbus configuration with moquette seating and larger luggage spaces. At year-end 2000, LWB had 149 super-low floor air-conditioned double-deck buses and 10 air-conditioned single-deck buses serving Tung Chung and the Airport.
Non-franchised Bus Servce
For the non-franchised bus service, the year 2000 was a fast-growing and satisfactory year. Overall average monthly turnover reached a record high of about HK$9 million compared with 1999's average monthly turnover of about HK$5 million. Profit derived from Non-franchised Transport Operations Division (the "Division") amounted to HK$8.6 for the year 2000 (1999: HK$4.9 million), representing an increase of 76.9% compared to that for the previous year.
The improved results were mainly attributable to the further expansion of the non-franchised bus fleet resulting in better economies of scale during 2000. With Sun Bus Limited as the flagship, the Division had a fleet of 177 vehicles at year-end 2000 (1999:87) with a total net asset value of HK$82.3 million (1999:HK$ 34.8 million), which provides various types of non-franchised bus services such as residential, commercial, employee, tour, student and contract hiring. All buses are air-conditioned and single-decked with seating capacity ranging from 24 to 61. During 2000, a total of 90 (1999:37) buses were purchased, including the 70 (1999:23) added to the fleet through the acquisition of two (1999: one) new subsidiary companies.
New Hong Kong Bus Co. Ltd. ("NHKB"), a subsidiary of the Division, jointly operates a cross-boundary shuttle bus service between Lok Ma Chau in Hong Kong and Huanggang in Shenzhen, together with its Shenzhen counterpart. This bus service has been well received by both regular cross-boundary commuters and holiday travellers. At present, only 10 air-conditioned single-deck buses are allowed to operate this service. In view of its popularity, NHKB and its Shenzhen partner have been in discussion with both the HKSAR and the Shenzhen governments to seek to improve the service including adding more buses with greater peak-hour carrying capacity.
Multi-media Business
The Group strives to improve its bus services to meet the ever-increasing needs and expectations of our customers and to stay ahead as the most-preferred mode of public transport. As such, the Group set up a new subsidiary, RoadShow Holdings Limited ("RoadShow"), to launch multi-media services in December 2000.
With an aim of becoming a leading out-of-home media sales company, RoadShow primarily markets advertising space on the interior of transit vehicles through a Multi-media On-board ("MMOB") system. The MMOB system consists of liquid crystal display monitors and video compact disc players, both mounted inside transit vehicles. The MMOB system transmits to passengers tailor-made programmes, which consist of information, entertainment, educational programmes, community service and advertisements.
RoadShow is currently the only provider of large-scale and territory-wide MMOB services on transit vehicles in Hong Kong. It also manages and markets advertising on the exterior of transit vehicles and advertising displays at transit vehicle shelters, as well as engaging in a merchandising business of selling commemorative items. As at the end of December 2000, 100 buses were equipped with MMOB. The Group expects to see a total of 2,000 transit vehicles equipped with MMOB by April of 2001.
In February 2001, the Board of the Company applied to the Stock Exchange of Hong Kong Limited ("the Exchange") to spin off RoadShow and list its shares on the main board of the Exchange. The Board believes that the separate listing will provide RoadShow with a more diversified funding source to finance its existing operations and future expansion.
Associate and Jointly Controlled Entity
At 31 December 2000, the Group's total interest in associate and jointly controlled entity amounted to HK$9.9 million (1999: HK$8.2 million). The investments were in respect of the operation of passenger bus services in Dalian and Tianjin, China. The co-operative joint venture ("CJV") in Dalian, established in 1997, between a 60% owned subsidiary of the Company and Dalian City No.1 Bus Company in Liaoning Province, PRC continued to make steady progress during 2000 yielding a satisfactory return on our investment. The CJV operates three bus routes in Dalian City deploying 46 double-deck and 40 single-deck buses. At the end of 2000, a new CJV contract was entered into between a 50% owned associate of the Company and Tianjin City Public Transport Holding Company Limited in Tianjin, PRC. For the initial phase of the project commencing operation in January 2001, this CJV operates seven bus routes in Tianjin deploying some 120 single-deck buses. The Group will continue to explore opportunities to expand the operation in Tianjin and other cities in Mainland China.
Year 2000 Issue
The transition to the Year 2000 and during 2000 was smooth and totally incident free as our Year 2000 compliance programme was successful in addressing all critical areas. The aggregate costs for the programme did not have a significant effect on the Group's operating results.
Purchase, Sale or Redemption of the Company's Listed Shares
During the year under review, the Company and its subsidiaries did not purchase, sell or redeem any of the Company's own shares.
Compliance with the Code of Best Practice
None of the Directors of the Company is aware of information which would reasonably indicate that the Company is or was at any time during the year ended 31 December 2000, not in compliance with the Code of Best Practice as set out in Appendix 14 to the Rules Governing the Listing of Securities of The Stock Exchange of Hong Kong Limited, except that the independent Non-executive Directors of the Company are not appointed for a specific term but are subject to retirement by rotation and re-election at the Annual General Meeting in accordance with the Bye-laws of the Company.
By Order of the Board
Lana Woo
Company Secretary
Hong Kong, 15 March 2001
Remark: A detailed announcement of results containing all the information required by paragraphs 45(1) to 45(3) of Appendix 16 of the Listing Rules will be subsequently published on The Stock Exchange of Hong Kong Limited's website in due course.
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