The Land Registry Trading Fund Profit and Loss Account
For the year ended 31 March 2001 Expressed in HK$'000
| Note | 2001 | 2000 | ||
|---|---|---|---|---|
 | ||||
| Turnover | 3 | 430,186 | 466,907 | |
| Operating costs | 4 | (342,418) | (366,864) | |
| ||||
| Profit from operations | 87,768 | 100,043 | ||
| Other income | 5 | 25,109 | 19,585 | |
| Finance cost | 6 | (7,353) | (8,977) | |
| ||||
| Profit before tax | 105,524 | 110,651 | ||
| Taxation | 7 | (13,235) | (14,939) | |
| ||||
| Profit after tax | 92,289 | 95,712 | ||
| Dividend | 8 | (27,687) | (28,714) | |
| Rate of return on fixed assets | 9 | 25.7% | 23.6% | |
| ||||
There were no recognised gains or losses other than the profit after tax for the year.
K.A. Salkeld, J.P.
Land Registrar and General Manager,
Land Registry Trading Fund
5 September 2001
The Land Registry Trading Fund Balance Sheet
As at 31 March 2001 Expressed in HK$'000
| Note | 2001 | 2000 | |||
|---|---|---|---|---|---|
| ASSETS | |||||
| Non-current assets | |||||
| Fixed assets | 10 | 360,329 | 405,239 | ||
| Current assets | |||||
| Debtors and prepayments | 14,226 | 14,629 | |||
| Amounts due from related parties | 5,211 | 16,167 | |||
| Placements with banks | 371,440 | 309,300 | |||
| Cash and bank balances | 829 | 1,549 | |||
| 391,706 | 341,645 | ||||
| Current liabilities | |||||
| Deferred revenue | 11 | 3,464 | 3,064 | ||
| Short-term borrowings | 12 | 23,660 | 26,260 | ||
| Interest payable to Government | 4,342 | 5,535 | |||
| Customers' deposits | 13 | 23,172 | 23,714 | ||
| Creditors | 3,489 | 2,620 | |||
| Amounts due to related parties | 22,717 | 29,944 | |||
| Tax payable | 1,150 | 19,253 | |||
| 81,994 | 110,390 | ||||
| Net current assets | 309,712 | 231,255 | |||
| Total assets less current liabilities | 670,041 | 636,494 | |||
| Non-current liabilities | |||||
| Deferred tax | 14 | 3,237 | 9,605 | ||
| Government loan | 15 | 47,320 | 70,980 | ||
| NET ASSETS | 619,484 | 555,909 | |||
| CAPITAL AND RESERVES | |||||
| Trading fund capital | 16 | 118,300 | 118,300 | ||
| Retained earnings | 17 | 473,497 | 408,895 | ||
| Proposed dividend | 8 | 27,687 | 28,714 | ||
| 619,484 | 555,909 | ||||
The Land Registry Trading Fund Cash flow Statement
For the year ended 31 March 2001 Expressed in HK$'000
| Note | 2001 | 2000 | ||
|---|---|---|---|---|
| Operating activities | ||||
| Profit from operations | 87,768 | 100,043 | ||
| Depreciation and amortisation | 56,315 | 69,667 | ||
| Increase/(Decrease) in deferred revenue | 400 | (396) | ||
| Decrease in creditors and amounts due to related parties | (6,358) | (5,199) | ||
| (Decrease) /Increase in customers' deposits | (542) | 159 | ||
| Decrease/(Increase) in debtors and amounts due from related parties | 10,830 | (6,092) | ||
| Net cash inflow from operating activities | 148,413 | 158,182 | ||
| Returns on investments and servicing of finance | ||||
| Rental received | 2,302 | 2,302 | ||
| Interest received | 23,335 | 16,180 | ||
| Interest paid | (8,546) | (11,166) | ||
| Dividend paid | (28,714) | (18,899) | ||
| Net cash outflow from returns on investments and servicing of finance | (11,623) | (11,583) | ||
| Taxation | ||||
| Profits tax paid | (37,705) | (11,686) | ||
| Tax paid | (37,705) | (11,686) | ||
| ||||
| Investing activities | ||||
| Net increase in placements with banks (other than cash equivalents) | (1,000) | (35,500) | ||
| Capital projects | (11,413) | (3,246) | ||
| Other assets | 8 | (693) | ||
| Net cash outflow from investing activities | (12,405) | (39,439) | ||
| Net cash inflow before financing | 86,680 | 95,474 | ||
| Financing | ||||
| Loan repayments | 18 | (26,260) | (26,260) | |
| Net cash outflow from financing | (26,260) | (26,260) | ||
| Increase in cash and cash equivalents | 60,420 | 69,214 | ||
| Cash and cash equivalents at 1 April 2000 | 86,849 | 17,635 | ||
| Cash and cash equivalents at 31 March 2001 | 19 | 147,269 | 86,849 | |
Notes on the Accounts
For the year ended 31 March 2001 Expressed in HK$'000
1. 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.
2. Accounting policies
(a)
Basis of accounting
The accounts have been prepared in accordance with accounting principles generally accepted in Hong Kong.
The accounts have been prepared in accordance with accounting principles generally accepted in Hong Kong.
(b)
Early adoption of Statement of Standard Accounting Practice
The Land Registry Trading Fund has adopted the revised Statement of Standard Accounting Practice No. 9 "Events After the Balance Sheet Date" issued by the Hong Kong Society of Accountants in January 2001. Following the adoption of this revised standard, dividends proposed or declared after the balance sheet date are no longer recognised as a liability at the balance sheet date but are disclosed as a separate component of equity on the face of the balance sheet. The accounting policy has been applied retrospectively. As a result, the proposed dividend of HK$28.714 million appearing in the balance sheet as at 31 March 2000 was reclassified as an item in Capital and Reserves.
The Land Registry Trading Fund has adopted the revised Statement of Standard Accounting Practice No. 9 "Events After the Balance Sheet Date" issued by the Hong Kong Society of Accountants in January 2001. Following the adoption of this revised standard, dividends proposed or declared after the balance sheet date are no longer recognised as a liability at the balance sheet date but are disclosed as a separate component of equity on the face of the balance sheet. The accounting policy has been applied retrospectively. As a result, the proposed dividend of HK$28.714 million appearing in the balance sheet as at 31 March 2000 was reclassified as an item in Capital and Reserves.
(c)
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 costing more than $100,000 on an individual basis are stated at their costs of acquisition.
(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.
(d)
Depreciation and amortisation
Depreciation
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 :
| Building | 3.3% |
| Computer system | 20% |
| Equipment, furniture and fittings | 10% - 20% |
| Office car | 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.
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.
(e)
Deferred tax
Provision is made for deferred tax in respect of all material timing differences attributable to accelerated depreciation allowances on fixed assets except where it is considered that no liability will crystallise in the foreseeable future.
Provision is made for deferred tax in respect of all material timing differences attributable to accelerated depreciation allowances on fixed assets except where it is considered that no liability will crystallise in the foreseeable future.
(f)
Revenue recognition
Revenue is recognised as services are provided. Interest income is recognised on an accrual basis.
Revenue is recognised as services are provided. Interest income is recognised on an accrual basis.
(g)
Related parties
The Land Registry Trading Fund is a separate accounting entity within the Government of the Hong Kong Special Administrative Region 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.
The Land Registry Trading Fund is a separate accounting entity within the Government of the Hong Kong Special Administrative Region 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 which are readily convertible into known amounts of cash without notice and which were within three months of maturity when acquired.
Cash equivalents are short-term, highly liquid investments which are readily convertible into known amounts of cash without notice and which were within three months of maturity when acquired.
3. Turnover
| 2001 | 2000 | ||
|---|---|---|---|
| Registration of documents | 233,870 | 241,926 | |
| Search | 80,214 | 83,461 | |
| Copying | 61,866 | 77,290 | |
| Reports on title | 42,951 | 52,928 | |
| Owners incorporation | 6,833 | 6,691 | |
| Others | 4,452 | 4,611 | |
| 430,186 | 466,907 | ||
4. Operating costs
| 2001 | 2000 | ||
|---|---|---|---|
| Staff costs | 220,642 | 222,415 | |
| General operating expenses | 20,198 | 20,416 | |
| Computer service charges | 20,030 | 27,428 | |
| Rental and management charges | 23,747 | 25,392 | |
| Central administration overhead | 1,137 | 1,215 | |
| Depreciation and amortisation | 56,315 | 69,667 | |
| Audit fees | 349 | 331 | |
| 342,418 | 366,864 | ||
5. Other income
| 2001 | 2000 | ||
|---|---|---|---|
| Rental income from Government | 2,302 | 2,302 | |
| Bank deposits interest | 22,807 | 17,283 | |
| 25,109 | 19,585 | ||
6. Finance cost
| 2001 | 2000 | ||
|---|---|---|---|
| Interest on | |||
| Government loans repaid and repayable within one year | 2,993 | 2,959 | |
| Government loan repayable after one year | 4,360 | 6,018 | |
| 7,353 | 8,977 | ||
7. Taxation
Notional profits tax is provided at the rate of 16% (2000 : 16%). 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. Provision is made for deferred tax in respect of all material timing differences attributable to accelerated depreciation allowances on fixed assets except where it is considered that no liability will crystallise in the foreseeable future.
| 2001 | 2000 | ||
|---|---|---|---|
| Notional profits tax | 19,459 | 24,261 | |
| Under-provision/(Over-provision) in previous year | 144 | (1) | |
| Deferred tax for the year Capital allowances less than related | |||
| depreciation charge | (6,368) | (9,321) | |
| Taxation for the year | 13,235 | 14,939 | |
8. Dividend
A dividend of $27.687 million being 30% of the profit after tax is proposed for the year ended 31 March 2001 (2000 : $28.714 million).
9. 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 Building | Computer Systems | Equipment, Furniture and Fittings | Office Car | Set-up | Total | |
|---|---|---|---|---|---|---|
| Cost or Valuation | | | | | | |
| At 1 April 2000 | 350,000 | 353,155 | 24,132 | 192 | 3,800 | 731,279 |
| Additions/(Adjustment) | - | 11,413 | (8) | - | - | 11,405 |
| Disposals | - | - | (1,065) | - | - | (1,065) |
| At 31 March 2001 | 350,000 | 364,568 | 23,059 | 192 | 3,800 | 741,619 |
| Aggregate Depreciation/ Amortisation | ||||||
| At 1 April 2000 | 25,674 | 277,587 | 18,950 | 29 | 3,800 | 326,040 |
| Charge for the year | 3,851 | 49,683 | 2,743 | 38 | - | 56,315 |
| Written back on disposals | - | - | (1,065) | - | - | (1,065) |
| At 31 March 2001 | 29,525 | 327,270 | 20,628 | 67 | 3,800 | 381,290 |
| Net Book Value | ||||||
| At 31 March 2001 | 320,475 | 37,298 | 2,431 | 125 | - | 360,329 |
| At 31 March 2000 | 324,326 | 75,568 | 5,182 | 163 | - | 405,239 |
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.
| 2001 | 2000 | ||
|---|---|---|---|
| Search tickets | 612 | 1,909 | |
| Subscription fees/other service charges | 2,852 | 1,155 | |
| Balance at 31 March 2001 | 3,464 | 3,064 | |
12.Short-term borrowings
| 2001 | 2000 | ||
|---|---|---|---|
| Government loan repayable within one year at 31 March 2001(see also note 15) | |||
| Set-up loan | 23,660 | 23,660 | |
| Project/Working capital loan | - | 2,600 | |
| 23,660 | 26,260 | ||
13. Customers' deposits
| 2001 | 2000 | ||
|---|---|---|---|
| Direct Access Services customers | 22,172 | 22,714 | |
| Government departments | 1,000 | 1,000 | |
| Balance at 31 March 2001 | 23,172 | 23,714 | |
14. Deferred tax
| 2001 | 2000 | ||
|---|---|---|---|
| Balance at 1 April 2000 | 9,605 | 18,926 | |
| Transfer to current taxation | (6,368) | (9,321) | |
| Balance at 31 March 2001 | 3,237 | 9,605 | |
15. Government loan
| 2001 | 2000 | ||
|---|---|---|---|
| Government loan repayable after one year at 31 March 2001 | 47,320 | 70,980 | |
A set-up loan of $236.6 million from the Capital Investment Fund was made in accordance with the resolution passed by the Legislative Council on 30 June 1993 to finance part of initial assets valued at $354.9 million appropriated to the Land Registry Trading Fund effective from 1 August 1993. The loan is repayable in ten equal annual instalments of $23.66 million starting from 1 August 1994. The eighth instalment due to be payable on 1 August 2001 is shown under short-term borrowings. The balance of $47.32 million shown under this item represents the balance of the loan after the eighth instalment.
A further loan facility of $160.7 million from the Capital Investment Fund was approved by the Finance Committee on 16 July 1993 to finance the capital projects under development and initial years' working capital of the Land Registry Trading Fund. The project/working capital loan was to be drawn as and when necessary during the four year period between 1993-94 and 1996-97 with a repayment period of five years. So far, only a drawdown of $13 million was made on 1 August 1995 and was fully repaid on 1 August 2000. On 21 February 1997, the Finance Committee approved an extension of the drawdown period of the estimated undrawn balance ($115 million) of the existing loan facility from 31 March 1997 to 31 March 2001. The drawdown period has now expired and no further extension of the loan facility has been made.
Interests for both loans are paid on the amount outstanding at the average of the best lending rates quoted by the continuing members of the Committee of the Hong Kong Association of Banks.
16. Trading fund capital
This represents the Government's investment in the Land Registry Trading Fund.
| 2001 | 2000 | ||
|---|---|---|---|
| Balance at 1 April 2000 | 118,300 | 118,300 | |
| Addition | - | - | |
| Balance at 31 March 2001 | 118,300 | 118,300 | |
17. Retained earnings
| 2001 | 2000 | ||
|---|---|---|---|
| Balance at 1 April 2000 | 408,895 | 341,897 | |
| Profit for the year | 92,289 | 95,712 | |
| 501,184 | 437,609 | ||
| Proposed dividend | (27,687) | (28,714) | |
| Balance at 31 March 2001 | 473,497 | 408,895 | |
18. Analysis of changes in financing during the year
| Government loan (including short-term borrowings) | |||
|---|---|---|---|
| 2001 | 2000 | ||
| Balance at 1 April 2000 | 97,240 | 123,500 | |
| Cash outflow from financing | (26,260) | (26,260) | |
| Balance at 31 March 2001 | 70,980 | 97,240 | |
19. Analysis of the balances of cash and cash equivalents at end of year
| 2001 | 2000 | ||
|---|---|---|---|
| Cash and bank balances | 829 | 1,549 | |
| Placements with banks | |||
| (cash equivalents portion) | 146,440 | 85,300 | |
| 147,269 | 86,849 | ||
20. Related party transactions
| Apart from those separately disclosed in the accounts, the other material related party transactions for the year are summarised as follows :- | |
| (a) | 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 $80 million (2000 : $90 million). This amount is included in Turnover under note 3. |
| (b) | Services received from related parties included computer services, accommodation, central administration and auditing. The total cost incurred on these services amounted to $37 million (2000 : $45 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. | |
21. Capital commitments
At 31 March 2001, the Land Registry Trading Fund had capital commitments, so far as not provided for in the financial statements, as follows :
| 2001 | 2000 | ||
|---|---|---|---|
| Contracted for | - | 6,600 | |
| Authorised but not contracted for | 209,000 | 202,700 | |
| 209,000 | 209,300 | ||
22. Comparative figures
Certain comparative figures have been reclassified to conform to the current year's presentation.