(a) 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.

(b) Basis of Consolidation

The consolidated accounts include the accounts of the Company and 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.

(c) Investments in Subsidiaries

Investments in subsidiaries in the Company's balance sheet are stated at cost less any provisions for permanent diminution in value as determined by the Directors. Dividends from subsidiaries are recognised when proposed.

(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.

(e) Revenue Recognition

(f) 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.

(g) 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.

(h) Amortisation and Depreciation

Amortisation and depreciation are provided at rates calculated to write off the cost or valuation of fixed assets over their estimated useful lives as follows:

Note:

(i) Operating Leases

Payments under operating leases are charged to the profit and loss account on a straight line basis over the periods of the respective leases.

(j) Deferred Taxation

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.

(k) Retirement Costs

The Group operates two separate non-contributory defined benefit retirement schemes. Annual contributions to the defined benefit retirement schemes during the year are paid and charged to the consolidated profit and loss account in accordance with the recommendations of independent actuaries based on triennial actuarial valuations.

Turnover comprises fares and other income from the operation of franchised public buses by the Group analysed as follows:

Directors' remuneration disclosed pursuant to Section 161 of the Companies Ordinance is as follows:

Fees and other emoluments in respect of independent non-executive Directors for the year ended 31 December 1997 amounted to HK$560,000 (1996: HK$500,000).

The Directors' remuneration is analysed as follows:

Of the five individuals with the highest emoluments, two (1996: two) are Directors whose emoluments are disclosed in Note 5. The aggregate of the emoluments in respect of the remaining three (1996: three) individuals are as follows:

The emoluments of the three (1996: three) individuals with the highest emoluments are within the following bands:

(a) Taxation in the Consolidated Profit and Loss Account represents:

No provision for taxation has been made in the accounts of the Company as it did not earn any income subject to Hong Kong Profits Tax during the year.

(b) Taxation in the Consolidated Balance Sheet represents:

(c) The Major Components of the Unprovided Liabilities are:

The Directors consider that these potential liabilities will not crystallise in the foreseeable future as the timing differences will be replaced by similar timing differences from the Group's capital expenditure in the coming years and therefore will not reverse. Accordingly, no provision for deferred taxation has been made.

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