In accordance with the general provisions of the Trading Funds Ordinance, the Land Registry has established and pursued clearly defined financial objectives. These include:

• Meeting expenses incurred in the provision of services to the public and government departments out of the income of the Trading Fund, taking one year with another;
• Making prompt repayment of loans and related interest to Government for funds borrowed at the time of setting up the Trading Fund; and
• Achieving a reasonable return, as determined by the Financial Secretary, on the average net fixed assets (ANFA) employed. The current prescribed rate is 10% per annum.

In the year ended 31 March 2004, the Land Registry Trading Fund achieved a net profit after taxation of HK$89.5 million and attained a return on ANFA of 22%.

When compared with last year, the overall revenue decreased by HK$5.6 million (down 1.5%), mainly due to decreased demand for services from Government Departments. Through effective cost controls and concerted efforts of the department, operating expenses decreased by HK$15.0 million (down 5.2%).

The Land Registry will continue to exercise strict control on costs. The implementation of IRIS will assist in increasing efficiency and keeping down recurrent costs. Rental costs will be reduced by about 40% after IRIS implementation as we will be able to reduce the size of offices in NT districts and release office space in Sai Wan Ho. Depreciation of the capital investment in the new system will tend to balance out this effect over the first five years of operation. The actual revenue and return on ANFA over the medium term will depend mainly on transaction volumes in the property market. This will depend on wider economic factors but we expect the recovery in market activity in the second half of 2003/04 to carry through into generally more stable business volumes.