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The Electrical and Mechanical Services Trading Fund was established
on 1 August 1996 under the Legislative Council Resolution passed
on 26 June 1996 pursuant to sections 3, 4 and 6 of the Trading
Funds Ordinance (Cap. 430) to provide comprehensive electrical,
mechanical and electronic services, vehicle services, and project
and consultancy services to clients. With effect from 1 August
1999, government bureaux, departments and autonomous bodies
(user departments) can be untied from using services provided
by the Electrical and Mechanical Services Trading Fund in four
phases over a three-year period. Upon untying, user departments
are free to retain the services of the Electrical and Mechanical
Services Trading Fund or to choose alternative service providers
to meet part or all of their electrical and mechanical service
needs.
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| 2.
ACCOUNTING POLICIES |
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(a) Basis
of accounting |
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The accounts have been prepared in accordance with accounting
principles generally accepted in Hong Kong.
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(b) Early
adoption of Statement of Standard Accounting Practice |
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The Electrical and Mechanical Services 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 recognized
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 $100.815 million appearing
in the balance sheet as at 31 March 2000 was reclassified as
an item in Capital and Reserves.
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(c) Fixed
assets |
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Fixed assets appropriated to the Electrical and Mechanical Services
Trading Fund on 1 August 1996 are stated at the value contained
in the Legislative Council Resolution for the setting up of
the Electrical and Mechanical Services Trading Fund. Fixed assets
acquired since 1 August 1996 and costing more than $100,000
on an individual basis are capitalised at the actual direct
expenditure of acquisition and installation with the exception
of motor vehicles which are treated as fixed assets regardless
of value.
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| (d)
Depreciation and amortisation |
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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: |
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Buildings
Computer systems and equipment
Plant and equipment
Motor vehicles
Furniture and fixtures
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5% - 10%
20% - 25%
14%
20%
20% |
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Land is regarded as a non-depreciating asset.
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| (e)
Deferred tax |
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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 crystallize in the foreseeable future.
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| (f)
Revenue recognition |
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Revenue is recognised as services are provided. Interest income
is recognised on an accrual basis.
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| (g)
Stocks and work in progress |
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Stocks and work in progress are stated at the lower of cost
and net realisable value. The cost of stocks is assigned by
using the weighted average cost formula. Work in progress represents
jobs in progress as at year end date.
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| (h)
Cash equivalents |
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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.
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| (i) Related
parties |
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The Electrical and Mechanical Services Trading Fund is a separate
accounting entity within the Government of the Hong Kong Special
Administrative Region (the Government) established under the
Trading Funds Ordinance (Cap. 430). During the year, the Electrical
and Mechanical Services 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. |
