Annual Report 2001 - 2002

For the year ended 31 March 2002 Expressed in HK$'000

Profit and Loss Account

	Note	2002		2001
Turnover	3	405,641		430,186
Operating costs	4	(310,999)		(342,418)
Profit from operations		94,642		87,768
Other income	5	15,945		25,109
Finance cost	6	(3,467)		(7,353)
Profit before tax		107,120		105,524
Taxation	7	(15,220)		(13,235)
Profit after tax		91,900		92,289
Dividend	8	(27,570)		(27,687)
Rate of return on fixed assets	9	26.6%		25.7%

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

As at 31 March 2002 Expressed in HK$'000

Balance Sheet

	Note	2002		2001
ASSETS
Non-current assets
Fixed assets	10	353,141		360,329
Current assets
Debtors and prepayments		12,453		14,226
Amounts due from related parties		11,535		5,211
Placements with banks		416,820		371,440
Cash and bank balances		2,185		829
		442,993		391,706
Current liabilities
Deferred revenue	11	2,592		3,464
Short-term borrowings	12	23,660		23,660
Interest payable to Government		1,751		4,342
Customers' deposits	13	22,714		23,172
Creditors		3,210		3,489
Amounts due to related parties		24,542		22,717
Tax payable		7,411		1,150
		85,880		81,994
Net current assets		357,113		309,712
Total assets less current liabilities		710,254		670,041
Non-current liabilities
Deferred tax	14	2,897		3,237
Government loan	15	23,660		47,320
NET ASSETS		683,697		619,484
CAPITAL AND RESERVES
Trading fund capital	16	118,300		118,300
Retained earnings	17	537,827		473,497
Proposed dividend	8	27,570		27,687
		683,697		619,484

For the year ended 31 March 2002 Expressed in HK$'000

Cash flow Statement

	Note	2002		2001
Operating activities
Profit from operations		94,642		87,768
Depreciation and amortisation		18,036		56,315
(Decrease)/Increase in deferred revenue		(872)		400
Increase/(Decrease) in creditors and amounts due to related parties		1,546		(6,358)
(Decrease) in customers' deposits		(458)		(542)
(Increase)/Decrease in debtors and amounts due from related parties		(4,979)		10,830
Net cash inflow from operating activities		107,915		148,413
Returns on investments and servicing of finance
Rental received		3,227		2,302
Interest received		13,146		23,335
Interest paid		(6,058)		(8,546)
Dividend paid		(27,687)		(28,714)
Net cash outflow from returns on investments and servicing of finance		(17,372)		(11,623)

Taxation
Profits tax paid		(9,299)		(37,705)
Tax paid		(9,299)		(37,705)
Investing activities
Net increase in placements with banks (other than cash equivalents)		(191,000)		(1,000)
Capital projects		(10,848)		(11,413)
Other assets		-		8
Net cash outflow from investing activities		(201,848)		(12,405)
Net cash (outflow)/ inflow before financing		(120,604)		86,680
Financing
Loan repayments	18	(23,660)		(26,260)
Net cash outflow from financing		(23,660)		(26,260)
(Decrease)/Increase in cash and cash equivalents		(144,264)		60,420
Cash and cash equivalents at 1 April 2001		147,269		86,849
Cash and cash equivalents at 31 March 2002	19	3,005		147,269

 

Notes on the Accounts

 

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.
(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 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.
(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 : Building 3.3% Computer systems 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.
(d)	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.
(e)	Revenue recognition Revenue is recognised as services are provided. Interest income is recognised on an accrual basis.
(f)	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.
(g)	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.

 

3. Turnover

	2002		2001
Registration of documents	215,670		233,870
Search	75,496		80,214
Copying	58,158		61,866
Reports on title	42,867		42,951
Owners incorporation	7,580		6,833
Others	5,870		4,452
	405,641		430,186

 

4. Operating costs

	2002		2001
Staff costs	223,176		220,642
General operating expenses	21,261		20,198
Computer service charges	22,754		20,030
Rental and management charges	23,809		23,747
Central administration overheads	1,568		1,137
Depreciation and amortisation	18,036		56,315
Audit fees	395		349
	310,999		342,418

 

5. Other income

	2002		2001
Rental income from Government	3,227		2,302
Bank deposits interest	12,718		22,807
	15,945		25,109

 

6. Finance cost

	2002		2001
Interest on Government loans	3,467		7,353

 

7. Taxation

 

8.Dividend

A dividend of $27.570 million being 30% of the profit after tax is proposed for the year ended 31 March 2002 (2001 : $27.687 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

 

11. Deferred revenue

 

12. Short-term borrowings

	2002		2001
Government loan repayable within one year at 31 March 2002(see also note 15)
Set-up loan	23,660		23,660

 

13. Customers' deposits

	2002		2001
Direct Access Services customers	21,562		22,172
Government departments	1,152		1,000
Balance at 31 March 2002	22,714		23,172

 

14. Deferred tax

	2002		2001
Balance at 1 April 2001	3,237		9,605
Transfer to current taxation	(340)		(6,368)
Balance at 31 March 2002	2,897		3,237

 

15. Government loan

	2002		2001
Government loan repayable after one year at 31 March 2002	23,660		47,320

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 ninth instalment due to be payable on 1 August 2002 is shown under short-term borrowings. The balance of $23.66 million shown under this item represents the balance of the loan after the ninth 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.

 

17. Retained earnings

	2002		2001
Balance at 1 April 2001	473,497		408,895
Profit for the year	91,900		92,289
	565,397		501,184
Proposed dividend	(27,570)		(27,687)
Balance at 31 March 2002	537,827		473,497

 

18. Analysis of changes in financing during the year

	Government loan (including short-term borrowings)
	2002		2001
Balance at 1 April 2001	70,980		97,240
Cash outflow from financing	(23,660)		(26,260)
Balance at 31 March 2002	47,320		70,980

 

19. Analysis of the balances of cash and cash equivalents at end of year

		2002		2001
Cash and bank balances		2,185		829
Placements with banks (cash equivalents portion)		820		146,440
		3,005		147,269

 

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 $78 million (2001 : $80 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 $40 million (2001 : $37 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 2002, the Land Registry Trading Fund had capital commitments, so far as not provided for in the financial statements, as follows :

		2002		2001
Contracted for		21,900		-
Authorised but not contracted for		149,600		209,000
		171,500		209,000

 

22. Operating lease commitments

At 31 March 2002, the total future minimum lease payments under operating leases of the Land Registry Trading Fund are payable as follows :

Land and Buildings		2002		2001
Operating leases which expire:
	within one year	454		5,975
	in the second to fifth years inclusive	14,738		17,729
	over five years	-		-
		15,192		23,704

 

23. Comparative figures

Certain comparative figures have been reclassified to conform to the current year's presentation.