Expressed in HK$'000
|
|
|
|
Status of the Land Registry Trading Fund |
|
|
|
|
|
|
|
The Land Registry Trading Fund was established on 1 August 1993 under the Legislative Council Resolution passed on 30 June 1993 pursuant to sections 3, 4 and 6 of the Trading Funds Ordinance (Cap. 430). The Land Registry administers a land registration system by maintaining an up-to-date Land Register and provides its customers with services and facilities for searches of the Land Register and related land records. The Land Registry also processes applications for the incorporation of owners. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounting policies
|
|
|
|
|
|
|
|
(a) |
Basis of accounting |
|
|
|
|
|
|
|
|
|
|
|
|
The accounts have been prepared in accordance with accounting principles generally accepted in Hong Kong. |
|
|
|
|
|
|
|
|
(b) |
Fixed assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
(i) |
Fixed assets appropriated to the Land Registry Trading Fund on 1 August 1993 are stated at the value contained in the Legislative Council Resolution for the setting up of the Land Registry Trading Fund. Fixed assets acquired since 1 August 1993 and up to 31 March 2004 and costing more than $100,000 on an individual basis are stated at their costs of acquisition. For items acquired since 1 April 2004 with cost more than $150,000, they are reported as fixed assets in the accounts. |
|
|
|
|
|
|
(ii) |
For capital projects under development, the costs include the actual direct expenditure and staff costs for planning, design and supervision during the development period. |
|
|
|
|
|
(c) |
Depreciation and amortisation |
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
(i) |
Depreciation is provided on a straight-line basis calculated to write off the cost of assets less residual value over their estimated useful lives. The annual rates of depreciation used are : |
|
|
|
|
|
|
|
|
|
Buildings |
|
3.3% |
|
|
|
|
|
|
|
|
Computer systems |
|
20% |
|
|
|
|
|
|
|
|
Equipment, furniture and fittings |
|
20% |
|
|
|
|
|
|
|
(ii) |
Land is regarded as a non-depreciating asset. |
|
|
|
|
|
|
Amortisation |
|
|
|
|
|
|
Capital projects are amortised over a period of five years. Full year amortisation is charged if a project starts commissioning on or before 30 September of the year, while half-year amortisation is charged for a project commissioned after 30 September. |
|
|
|
|
|
(d) |
Income tax |
|
|
|
|
|
|
(i) |
Income tax for the year comprises current tax and movements in deferred tax assets and liabilities. Income tax is recognised in the profit and loss account except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. |
|
|
|
|
|
|
(ii) |
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. |
|
|
|
|
|
|
(iii) |
Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits. |
|
|
|
|
|
|
|
All deferred tax liabilities, and all deferred tax assets, to the extent that it is probable that future taxable profits will be available against which the assets can be utilised, are recognised. |
|
|
|
|
|
|
|
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax assets and liabilities are not discounted. |
|
|
|
|
|
|
|
The carrying amount of a deferred tax asset is reviewed at the balance sheet date and is reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the related tax benefit to be utilised. Any such deduction is reversed to the extent that it becomes probable that sufficient taxable profit will be available. |
|
|
|
|
|
|
(iv) |
Current tax balances and deferred tax balances, and movements therein, are presented separately from each other and are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets against deferred tax liabilities if, and only if, the Land Registry Trading Fund has the legally enforceable right to set off current tax assets against current tax liabilities and the following additional conditions are met : |
|
|
|
|
|
|
|
- in the case of current tax assets and liabilities, the Land Registry Trading Fund intends to settle them on a net basis; or |
|
|
|
|
|
|
|
- in the case of deferred tax assets and liabilities,if they relate to income taxes levied by the same taxation authority. |
|
|
|
|
|
(e) |
Revenue recognition |
|
|
|
|
|
|
|
|
Revenue is recognised as services are provided. Interest income is recognised on an accrual basis. |
|
|
|
|
(f) |
Employee benefits |
|
|
|
|
|
Salaries and annual leave are accrued and recognised as an expense in the year in which the associated services are rendered by the staff. Staff oncosts including pensions, housing and non-monetary benefits provided to the staff by the Government of the Hong Kong Special Administrative Region (the Government) are charged to the Land Registry Trading Fund and recognised as an expense in the year in which the associated services are rendered. |
|
|
|
|
(g) |
Related parties |
|
|
|
|
|
The Land Registry Trading Fund is a separate accounting entity within the Government established under the Trading Funds Ordinance (Cap. 430). During the year, the Land Registry Trading Fund has entered into transactions with various related parties, including government bureaux and departments, trading funds and financially autonomous bodies controlled or significantly influenced by the Government, in the ordinary course of its business. |
|
|
|
|
(h) |
Cash equivalents |
|
|
|
|
|
Cash equivalents are short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, with a maturity of three months or less from the date of acquisition. |
|
|
|
|
|
|
|
|
|
|
Turnover |
|
|
|
|
|
|
2005 |
|
2004 |
|
|
|
|
|
|
|
|
|
Registration of documents |
233,720 |
|
181,402 |
|
Search |
85,297 |
|
72,005 |
|
Copying |
66,958 |
|
53,173 |
|
Reports on title |
38,235 |
|
45,013 |
|
Owners incorporation |
5,761 |
|
6,296 |
|
Others |
5,320
|
|
4,427
|
|
|
|
435,291
|
|
362,316
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs
|
|
|
|
|
|
2005 |
|
2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Staff costs |
189,117 |
|
202,105 |
|
General operating expenses |
20,815 |
|
19,332 |
|
Computer service charges |
17,372 |
|
16,372 |
|
Rental and management charges |
19,828 |
|
20,682 |
|
Central administrative overheads |
1,783 |
|
1,546 |
|
Depreciation and amortisation |
23,665 |
|
10,420 |
|
Audit fees |
393
|
|
396
|
|
|
|
272,973
|
|
270,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
|
|
|
|
2005 |
|
2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank deposits interest |
3,763
|
|
4,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance cost
|
|
|
|
|
|
|
2005 |
|
2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on Government loans |
-
|
|
395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxation
|
|
|
|
|
|
|
(i) |
Notional profits tax is provided at 17.5% (2004: 17.5%) of the estimated assessable profits for the year. A payment in lieu of profits tax calculated on the basis of the provisions of the Inland Revenue Ordinance (Cap. 112) will be made to the Government. The amount of taxation charged/(credited) to the profit and loss account represents : |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005 |
|
2004 |
|
Current tax |
|
|
|
|
|
Notional profits tax |
23,948 |
|
8,957 |
|
|
Over-provision in previous year |
(452)
|
|
(10,309)
|
|
|
|
23,496
|
|
(1,352)
|
|
|
|
|
|
|
|
Deferred tax |
|
|
|
|
|
Origination and reversal of temporary differences |
4,458
|
|
6,913
|
|
|
|
|
|
|
|
Total income tax expense |
27,954
|
|
5,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(ii) |
Reconciliation between tax expense and accounting profit at applicable tax rates : |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005 |
|
2004 |
|
|
|
|
|
|
|
Profit before tax |
166,081
|
|
95,105
|
|
|
|
|
|
|
|
Notional tax on profit before tax |
29,064 |
|
16,643 |
|
Over-provision in previous year |
(452) |
|
(10,309) |
|
Recognition of a previously unrecognised deferred tax asset |
- |
|
(66) |
|
Tax effect of non-taxable revenue |
(658)
|
|
(707)
|
|
Actual tax expense |
27,954
|
|
5,561
|
|
|
|
|
|
|
|
|
|
|
Dividend
|
|
|
|
|
|
|
A dividend of $69.064 million being 50% of the profit after tax is proposed for the year ended 31 March 2005 ( 2004: $44.772 million ). |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rate of return on fixed assets
|
|
|
|
|
|
|
This is calculated as a percentage of operating profit and interest income after taxation to Average Net Fixed Assets (ANFA). The Land Registry Trading Fund is expected to meet a target return of 10% per annum on ANFA as determined by the Financial Secretary. |
|
|
|
|
|
|
|
|
|
|
|
10. |
Fixed assets
|
|
|
Land and Buildings |
Computer Systems |
Equipment,
Furniture and Fittings |
Set-up Costs |
Total |
|
Cost or Valuation |
|
|
|
|
|
|
At 1 April 2004 |
350,000 |
466,276 |
15,103 |
3,800 |
835,179 |
|
Additions |
- |
40,329 |
1,776 |
- |
42,105 |
|
Disposal |
- |
- |
(6,011) |
- |
(6,011)
|
|
At 31 March 2005 |
350,000 |
506,605 |
10,868 |
3,800 |
871,273
|
|
Aggregate Depreciation/ Amortisation |
|
|
|
|
|
|
At 1 April 2004 |
41,078 |
352,834 |
14,948 |
3,800 |
412,660 |
|
Charge for the year |
3,851 |
19,418 |
396 |
- |
23,665 |
|
Disposal |
- |
- |
(6,011) |
- |
(6,011)
|
|
At 31 March 2005 |
44,929 |
372,252 |
9,333 |
3,800 |
430,314
|
|
Net Book Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2005 |
305,071 |
134,353 |
1,535 |
- |
440,959
|
|
At 31 March 2004 |
308,922 |
113,442 |
155 |
- |
422,519
|
|
|
|
11. |
Deferred revenue
|
|
|
|
|
|
|
This represents outstanding search tickets and subscription fees/other service charges received in advance of which services have not yet been rendered. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005 |
|
2004 |
|
|
|
|
|
|
|
Search tickets |
416 |
|
700 |
|
Subscription fees/other service charges |
1,172 |
|
1,020 |
|
Balance at 31 March |
1,588
|
|
1,720
|
|
|
|
|
|
|
|
|
|
|
|
|
12.
|
Customers' deposits |
|
|
|
|
|
|
2005 |
|
2004 |
|
|
|
|
|
|
|
Online Services Subscribers/ |
|
|
|
|
|
Direct Access Services customers |
21,477
|
|
20,115
|
|
Government departments |
1,256 |
|
1,156 |
|
Balance at 31 March |
22,733
|
|
21,271
|
|
|
|
|
|
|
|
|
|
13. |
Deferred tax
|
|
|
|
|
|
|
Major components of deferred tax recognised in the balance sheet and the movements during the year are as follows : |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation allowances in excess of the related depreciation |
|
Other temporary differences |
|
Total |
|
Balance at 1 April 2004 |
17,986 |
|
(107) |
|
17,879 |
|
Charged/(Credited) to profit and loss account |
4,418 |
|
40 |
|
4,458 |
|
Balance at 31 March 2005 |
22,404
|
|
(67)
|
|
22,337
|
|
Balance at 1 April 2003 |
10,966 |
|
- |
|
10,966 |
|
Charged/(Credited) to profit and loss account |
7,020 |
|
(107) |
|
6,913 |
|
Balance at 31 March 2004 |
17,986
|
|
(107)
|
|
17,879
|
|
|
|
14. |
Trading fund capital
|
|
|
|
|
|
|
This represents the Government's investment in the Land Registry Trading Fund . |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15. |
Retained earnings |
|
|
|
|
|
|
|
2005 |
|
2004 |
|
|
|
|
|
|
|
Balance at 1 April |
553,761 |
|
508,989 |
|
|
Profit for the year |
138,127
|
|
89,544
|
|
|
|
691,888 |
|
598,533 |
|
|
Proposed dividend |
(69,064)
|
|
(44,772)
|
|
|
Balance at 31 March |
622,824
|
|
553,761
|
|
|
|
|
|
|
|
|
|
|
|
|
16.
|
Analysis of the balances of cash and cash equivalents at end of year |
|
|
|
|
|
|
|
|
|
2005 |
|
2004 |
|
|
|
|
|
|
|
|
Cash and bank balances |
90,624 |
|
3,925 |
|
|
|
|
|
|
|
Placements with banks (cash equivalents portion) |
4,500
|
|
-
|
|
|
|
95,124
|
|
3,925
|
|
|
|
|
|
|
|
|
|
17. |
Related party transactions
|
|
|
|
|
|
|
Apart from those separately disclosed in the accounts, the other material related party transactions for the year are summarised as follows :
|
|
(i) |
Services provided to related parties included registration of land documents, search of land registers and records, supply of copies of land records and reports on title. The total revenue derived from these services amounted to $68 million (2004: $77 million). This amount is included in Turnover under note 3.
|
|
(ii) |
Services received from related parties included computer services, accommodation, central administration and auditing. The total cost incurred on these services amounted to $29 million (2004 : $35 million). This amount is included in Operating Costs under note 4.
|
|
Charging for services rendered to or received from related parties was on the same basis, that is, at the rates payable by the general public for services which were also available to the public or on a full cost recovery basis for services which were available only to related parties. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18. |
Capital commitments
|
|
|
|
|
|
|
At 31 March 2005, the Land Registry Trading Fund had capital commitments, so far as not provided for in the financial statements, as follows : |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005 |
|
2004 |
|
|
|
|
|
|
|
Contracted for |
70,100 |
|
91,000 |
|
Authorised but not contracted for |
45,850
|
|
37,300
|
|
|
|
115,950
|
|
128,300
|
|
|
|
|
|
|
|
|
|
19. |
Operating lease commitments
|
|
|
|
|
|
|
At 31 March 2005, the total future minimum lease payments under operating leases of the Land Registry Trading Fund are payable as follows : |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
. |
|
|
2005 |
|
2004 |
. |
|
|
|
|
|
|
Land and Buildings |
|
|
|
. |
|
|
|
|
|
|
Operating leases which expire : |
|
|
|
|
within one year |
4,230 |
|
5,867 |
|
in the second to fifth years inclusive |
6,245
|
|
9,897
|
|
|
|
10,475
|
|
15,764
|
|
|
|
|
|
|
|
|
|
20. |
New accounting standards in Hong Kong
|
|
|
|
|
|
|
The Hong Kong Institute of Certified Public Accountants has issued a number of new and revised Hong Kong Financial Reporting Standards and Hong Kong Accounting Standards (“new HKFRSs") which are effective for accounting periods beginning on or after 1 January 2005. The Land Registry has not early adopted these new HKFRSs in the financial statements for the year ended 31 March 2005. The Land Registry has already commenced an assessment of the impact of these new HKFRSs but is not yet in a position to state whether these new HKFRSs would have a significant impact on its results of operations and financial position. |
|
|
|
|
|
|
|
|
|
|
|
|