Start-up costs put pressure on tunnel firm
PROFITS at Wharf (Holdings) associate Cross-Harbour Tunnel Co were flat last year as start-up costs hit margins already under pressure.
Turnover was up by 8.3 per cent to $728.26 million, but profit at the operating and post-tax level was virtually unchanged.
Operating profits were $282.48 million while profit after tax was $227.04 million, up by just 2.5 per cent.
Operating margins deteriorated from 41.8 per cent to 38.8 per cent.
Earnings per share fell by 16.9 per cent, partly because of the one-for-two rights issue of shares in 1993.
The rights issue was made to fund the purchase of a 37 per cent stake in the Western Harbour Crossing syndicate.
The Western Crossing is on schedule with the first section of concrete tube under construction at Shek O.
A spokesman for the firm said that the company's main source of revenue, and the main difficulty in protecting its profit margins, was the cross-harbour tunnel.
'The tunnel has been operating at close to full capacity for some years now,' the spokesman said.
'There has been no operating revenue growth and the company has had to handle steadily increasing operating expenses.' The company has not asked for raised tolls but should the Government decide to increase the passenger tax paid by tunnel users, the company will ask to be compensated.
'The tax is currently $5 and rates and other taxes come to another $1.10 per head,' said the spokesman.
The firm has two other principal sources of revenue. Its Hong Kong School of Motoring operates three driving schools throughout the territory.
The third opened in March of last year in Yuen Long, according to the spokesman. 'It was a start up operation so it had higher overheads,' said the spokesman, who added that the latest operation was profitable during the year.
The third and smallest strand to the group's business comes from tunnel auto-pay systems.
The group operates the Autopass auto-payment system at the cross-harbour, Aberdeen and Lion Rock tunnels.
Subscriptions have topped 50,000, according to the spokesman.
'Autopass is currently being marketed to active tunnel users,' said the spokesman.
'There are adverts on the toll-booths.' A final dividend of 37 cents has been paid.
The firm paid three quarterly dividends of 27 cents last year in line with a policy of reducing pro rata dividend payments by 20 per cent following the rights issue of 1993.
The payout on dividends was $226.13 million last year as against $208.19 million in 1993.