AMS Public Transport : AMSPT - 2023/24 Annual Report

AMS PUBLIC TRANSPORT HOLDINGS LIMITED

進智公共交通控股有限公司

I n corpo rated in th e Caym a n I s l a n d s wi th limited l i a b ili ty

( Stock Code : 77 )

A N N U A L R E P O R T

CONTENTS

• Company Information

• Financial and Operating Highlights

• Chairman's Statement

• Management Discussion and Analysis

15 Environmental, Social and Governance Report

25 Corporate Governance Report

43 Directors and Senior Management Profile

46 Directors' Report

56 Independent Auditor's Report

1. Consolidated Income Statement
2. Consolidated Statement of Comprehensive Income
3. Consolidated Statement of Financial Position
4. Consolidated Statement of Changes in Equity
5. Consolidated Cash Flow Statement
6. Notes to the Consolidated Financial Statements

120 Group Financial Summary

COMPANY INFORMATION

AMS Public Transport Holdings Limited (the "Company") and its subsidiaries (collectively the "Group") are principally engaged in the operation of franchised public light bus ("PLB"), also commonly known as green minibus, and residents' bus transportation services in Hong Kong.

Over the past 50 years, riding on its expertise, the Group has played an integral role in Hong Kong's transportation network development and continues to contribute to the city's mobility infrastructure.

Currently, the Group operates an extensive network of 73 franchised PLB routes with 354 PLBs. In addition, it operates four residents' bus routes with seven public buses. The Group remains committed to optimising its routes and services to meet the evolving needs of passengers and keep pace with the city's transportation demands. Passenger comfort and convenience are paramount to the Group's operations. Its fleet comprises environmentally friendly PLBs equipped with state-of-the-art facilities.

Safety remains a top priority for the Group across all its operations. In recognition of its commitment to quality management, the Group has obtained ISO 9001:2015 certification for its computerised repair and maintenance centers since 2011, making it the first franchised PLB operator in the Hong Kong to gain such a prestigious quality accreditation. This significant achievement reinforces the Group's dedication to ensuring the highest standards of safety, reliability, and passenger satisfaction.

As a trustworthy transportation service provider, the Group remains dedicated to delivering efficient, reliable, and safe passenger transportation services in Hong Kong. It will continue to prioritise passenger needs, strive to provide a seamless and enjoyable travel experience and aim to be the preferred choice for commuters in Hong Kong.

Board of Directors

Mr. Wong Ling Sun, Vincent Chairman Ms. Ng Sui Chun

Mr. Chan Man Chun Chief Executive Officer Ms. Wong Wai Sum, Maya

Ms. Wong Wai Man, Vivian*

Dr. Chan Yuen Tak Fai, Dorothy** Mr. Kwong Ki Chi**

Mr. James Mathew Fong**

• Non-ExecutiveDirector

• Independent Non-Executive Directors

Authorised Representatives

Mr. Wong Ling Sun, Vincent

Mr. Chan Man Chun

Audit Committee

Mr. Kwong Ki Chi Chairman

Dr. Chan Yuen Tak Fai, Dorothy

Mr. James Mathew Fong

Nomination Committee

Dr. Chan Yuen Tak Fai, Dorothy Chairman

Mr. Kwong Ki Chi

Mr. James Mathew Fong

Remuneration Committee

Mr. James Mathew Fong Chairman

Dr. Chan Yuen Tak Fai, Dorothy

Mr. Kwong Ki Chi

Company Secretary

Ms. Wong Ka Yan

Registered Office

Cricket Square

Hutchins Drive

P.O. Box 2681

Grand Cayman KY1-1111

The Cayman Islands

Head office and principal place of business in Hong Kong

11th-12th Floor, Abba Commercial Building, 223 Aberdeen Main Road, Aberdeen, Hong Kong

Hong Kong share registrar and transfer office

Union Registrars Limited

Suites 3301-04, 33/F,

Two Chinachem Exchange Square,

338 King's Road,

North Point, Hong Kong

Principal Bankers

Bank of China (Hong Kong) Limited Hang Seng Bank Limited

The Hongkong and Shanghai Banking Corporation Limited

Auditor

Grant Thornton Hong Kong Limited

Certified Public Accountants

Registered Public Interest Entity Auditor

• AMS Public Transport Holdings Limited

FINANCIAL AND OPERATING HIGHLIGHTS

			Year ended 31 March
Financial Highlights	Unit	2024	2023		Change
Financial results
Revenue	HK$'000	393,686	374,896	+5.0%
Profit for the year excluding deficit on revaluation
of PLB licences and reversal of/provision for
impairment of public bus licences	HK$'000	24,378	59,595	-59.1%
Deficit on revaluation of PLB licences charged to
consolidated income statement	HK$'000	34,980	20,460	+71.0%
(Loss)/Profit attributable to equity holders of the
Company	HK$'000	(11,952)	39,285		N/A
(Loss)/Earnings per share	HK cents	(4.40)	14.45		N/A
Proposed final dividend per ordinary share1	HK cents	-	9.0		N/A
Proposed special dividend per ordinary share	HK cents	4.0	-		N/A
Profit margin ((loss) or profit attributable to equity
holders/revenue)			(3.0)%	10.5%
Return on equity ((loss) or profit attributable to
equity holders/shareholders' equity)			(30.6)%	51.0%
			As at 31 March
	Unit	2024	2023		Change
Financial position
Bank borrowings	HK$'000	113,007	129,014	-12.4%
Shareholders' equity	HK$'000	39,000	76,967	-49.3%
Current ratio (current assets/current liabilities)	Times	0.63	0.89
Gearing ratio (total bank borrowings less bank
balances and cash/shareholders' equity)			143.5%	78.4%

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Financial and Operating Highlights

			Year ended 31 March
Operating Highlights	Unit	2024	2023		Change
Number of PLBs in service as at year end			354	354		-
Number of public buses in service as at year end			7	7		-
Number of franchised PLB routes as at year end			72	72		-
Number of residents' bus routes as at year end			4	4		-
Number of passengers carried	million	55.5	53.0	4.7%
Number of journeys traveled	million	3.70	3.74	-1.1%
- percentage of the journeys traveled surpassing
the total number of scheduled journeys required
by the Transport Department			12.8%	14.2%		-1.4pp3
Total mileage operated	million kilometers	34.1	34.7	-1.7%
Average fleet age as at year end	years	7.7	6.7	14.9%
Average accident rate2	per million km	3.4	3.4		-

Notes:

1. No interim dividend was declared for the years ended 31 March 2024 and 2023.
2. The figures refer to accidents involving injury or death.
3. pp stands for percentage point.

• AMS Public Transport Holdings Limited

CHAIRMAN'S STATEMENT

Wong Ling Sun, Vincent

Chairman

On behalf of the Board of Directors of the Company (the "Board"), I hereby present to you the results of the Group for the year ended 31 March 2024.

RESULTS FOR THE YEAR

The Group recorded a loss for the year ended 31 March 2024 of HK$11,952,000 (2023: profit of HK$39,285,000). The substantial change in the financial results for the year compared to last year was primarily attributable to the absence of the one-off subsidies amounting to HK$45,406,000 received from the Government's Anti- epidemic Fund in last year and the increase in non-cash deficit on revaluation of PLB licences by HK$14,520,000 or

71.0% to HK$34,980,000 as compared to last year (2023: HK$20,460,000).

Excluding the effect of the said one-off Government subsidies and the non-cash deficit on revaluation of PLB licences and provision for impairment of public bus licences, the Group's achieved an operating profit of around HK$24,378,000 for the year, which is a 71.8% increase compared to that of HK$14,189,000 last year. The primary factor contributing to the improvement in operational performance was the sustained recovery in the Group's patronage following the end of the COVID-19 pandemic.

DIVIDENDS

Basic loss per share for the year was HK4.40 cents (2023: basic earnings per share of HK14.45 cents). Having carefully considered the factors listed in the Company's dividend policy, which include but not limited to the financial performance and the future cash flows of the Group under the current business environment, the Board recommended a special dividend of HK4.0 cents per ordinary share (2023: Nil), totaling HK$10,877,000 for the year ended 31 March 2024 (2023: Nil). No final dividend was declared by the Board for the year ended 31 March 2024 (2023: HK9.0 cents, totaling HK$24,472,000).

FINANCIAL AND BUSINESS REVIEW

In the second year of the post-pandemic era, Hong Kong's economy recovery recorded a moderate growth. The Group benefited from the rebound and achieved a 4.7% growth in patronage. Coupled with the effect from fare adjustment, the Group's revenue increased by HK$18,790,000 or 5.0% to HK$393,686,000 (2023: HK$374,896,000), as compared with last year.

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Chairman's Statement

With the continuous growth in revenue, the Group further improved its operating profit during the year. Excluding the effect of the one-off Government subsidies received last year and the non-cash deficit on revaluation of PLB licences and provision for impairment of public bus licences, the Group recorded an substantial 71.8% increase of operating profit to around HK$24,378,000 for the year, compared to that of HK$14,189,000 last year.

While we are pleased the Group has recorded continuous improvement in operational performance in the post- pandemic period, it should be noted that both patronage and operating profit for the year have yet to reach pre-pandemic peaks. The operating environment for the minibus industry has remained challenging. High fuel costs, the expanding rail network, growing competition from other public transport modes, as well as persistent labor shortages, have all exerted pressure on the Group's financial results.

The difficult operating environment for the minibus industry, particularly within the red minibus segment, combined with elevated market borrowing rates, have continued to drive down the prevailing market prices of PLB licences. Although the Group's strategic positioning is focused on operations rather than licence investment, it was nonetheless required to record a HK$34,980,000 deficit from the revaluation of PLB licences for the year (2023: HK$20,460,000).

These market conditions, which are beyond our direct control, have exerted considerable pressure on the Group's asset value. However, we remain steadfast in our commitment to delivering reliable, high-quality transportation services to our passengers, while prudently managing our capital resources in response to these evolving industry dynamics.

As a labour-intensive industry, the persistent shortage of qualified captains has posed ongoing challenges to the Group's daily operations, i.e. affecting the frequency of services and driving up labour costs. We appreciate the Government's introduction of a labour importation scheme for the transport sector. During the year, the Group successfully onboarded the first batch of Mainland Chinese captains under the Government initiative. Upon their arrival, the Group provided these Mainland Chinese captains with comprehensive training programs, and the majority have passed the required driving examinations. As at the date of this annual report, there are 36 Mainland Chinese captains fulfilling duties across our fleet. The addition of skilled and experienced captains from Mainland China has improved the Group's operational capabilities, enabling us to deliver more efficient and reliable services to our passengers. The Group has received positive feedback from the frontline workforce and the passengers regarding the driving skills and service quality demonstrated by these Mainland Chinese captains.

PROSPECTS

The management remains cautiously optimistic about the future prospects, as we anticipate that the Government's ongoing economic stimulus measures and the further resumption of the local economy will contribute to an improvement in the Group's patronage levels. Furthermore, the management anticipates that the general fare increase on certain routes, expected to be approved in the coming months, will also contribute to the growth in operating revenue. After the year end 31 March 2024 and up to the date of this report, the approval of fare increases in 21 routes of the Group have been granted by the Transport Department.

As mentioned, the Group has received positive feedback on importing the first batch of Mainland Chinese captains. Therefore, the Group has applied for a further importation of captains under the second batch of the scheme. Given the ongoing aging population in Hong Kong, which is expected to persist in the short to medium term, the management hopes that the Government will be able to incorporate the foreign captain importation scheme as a regular scheme. This will enable the Group and the minibus industry to continuously supplement their workforce and address the challenges posed by the aging demographic trends, ensuring a stable supply of labour to support the industry's operations.

• AMS Public Transport Holdings Limited

Chairman's Statement

The rapid expansion of Hong Kong's railway network over the past decade has also posed significant challenges to the minibus industry. The significant drop in PLB licence prices reflects the extremely challenging business environment currently faced by the sector. It is reported that the Transport Department is considering relaxing the "red to green" restrictions which red minibus routes that participate in the Public Transport Fare Concession Scheme for the Elderly and Eligible Person with Disabilities ("$2 Scheme") will be invited to convert their routes to continue operating as green minibuses, if they meet certain conditions, without having to go through the usual open tender process. However, other than that, the Group's management notes that they do not perceive any long-term policy initiatives from the Government aimed at improving the industry's long-term prospects. We hope that in the design of major urban development plans, such as the Northern Metropolis, one of Hong Kong's key growth areas, the Government will give due consideration to the role of minibus services as a vital component of the broader transportation ecosystem.

Despite these headwinds, the Group will remain committed to working closely with the relevant authorities and stakeholders to ensure the continuous provision of reliable, accessible, and sustainable minibus services for the Hong Kong public.

APPRECIATION

Last but not least, on behalf of the Board, I would like to take this opportunity to express my greatest gratitude to all our passengers, business partners, associates as well as our shareholders for their continuous support to and confidence in the Group. Lastly, my heartfelt appreciation must also be extended to my fellow Directors and our employees for their invaluable dedication to the Group in the past years.

Wong Ling Sun, Vincent

Chairman

Hong Kong, 27 June 2024

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MANAGEMENT DISCUSSION AND ANALYSIS

AMS's objective is to propel the Group into a prominent market position by providing the public with reliable, safe and comfortable journeys, and hence maximising stakeholders' value.

The Group endeavors to achieve its objective by maintaining a team of management expertise which puts continuous effort in improving fleet productivity, efficiency and service quality, and carrying out stringent repair and maintenance programmes for the sake of safety.

REVIEW OF OPERATION

• In order to enhance operational efficiency and service quality, the Group continued to put effort in proposing route re-organisations plans to the Transport Department. During the year, the Group completed certain route re-organisations involving eight franchised PLB routes. The focus of the route re-organisations of the year was to adjust the fleet size of the individual route packages and the service hours or frequencies of particular routes so as to meet passenger demand. The number of PLB routes operated by the Group remained at 72 (2023: 72) and the number of PLBs operated by the Group remained at 354 as at 31 March 2024 (2023: 354). The number of routes and fleet size of residents' bus also stayed at 4 (2023: 4) and 7 (2023: 7) respectively.

• As of 31 March 2024, the Group's average fleet age was 7.7 years (2024: 6.7 years). Furthermore, as at 31 March 2024, the Group deployed 275 of the 19-seat PLBs (2023: 275), which accounted for approximately 78% of the Group's PLB fleet (2023: 78%).
• In the second year of the post-pandemic recovery period, Hong Kong's economy has maintained a moderate growth. According to the transport figures published by the Transport Department, the total number of passenger journeys carried by the public transport operators and the green minibus operators during the year ended 31 March 2024 increased by 8.6% and 3.3% respectively, as compared with last year.

• AMS Public Transport Holdings Limited

Management Discussion and Analysis

• Following the broader resumption of normalcy in Hong Kong's economic and social activities, the persistent challenge of captain shortages has once again impacted the operations of the Group's PLB services. The shortage of captains affected the service frequencies in some routes. Thus the Group's total mileage travelled for the year slightly decreased by around 1.7% to approximately 34.1 million kilometers (2023: 34.7 million kilometers). With the continuous efforts to optimise the existing resources so as to enhance the operational efficiency, coupled with the increase in passenger flow after the end of the pandemic, the patronage of the Group's franchised PLB services the year increased by 4.7% to approximately 55.5 million compared with last year (2023: approximately 53.0 million).
• In an effort to ease the pressure from high fuel costs and climbing staff costs, the Group continued to submit fare increase applications and was granted approval to raise the fares in 9 routes at rates ranging from 3.8% to 7.8% (2023: 33 routes at rates ranging from 5.3% to 13.8%) during the year.

FINANCIAL REVIEW

Consolidated results for the year

The Group recorded a loss for the year ended 31 March 2024 of HK$11,952,000 (2023: profit of HK$39,285,000). The substantial change in the financial results for the year compared to last year was primarily attributable to the absence of the one-off subsidies amounting to HK$45,406,000 received from the Government's Anti- epidemic Fund last year and the increase in non-cash deficit on revaluation of PLB licences by HK$14,520,000 or

71.0% to HK$34,980,000 as compared to last year (2023: HK$20,460,000).

Excluding the effect of the said one-off Government subsidies and the non-cash deficit on revaluation of PLB licences and provision for impairment of public bus licences, the Group's achieved an operating profit of around HK$24,378,000 for the year, which is a 71.8% increase compared to that of HK$14,189,000 last year. The primary factor contributing to the improvement in operational performance was the sustained recovery in the Group's patronage following the end of the COVID-19 pandemic.

The details of the consolidated results are presented below:

	Year ended 31 March
				Increase/
	2024	2023	(Decrease)
	HK$'000		HK$'000	HK$'000	In %
Revenue	393,686	374,896	18,790	+5.0%
Other revenue and other net (expense)/income	9,399	54,426	(45,027)	-82.7%
Direct costs	(323,036)	(321,586)	1,450	+0.5%
Administrative expenses	(41,272)	(39,083)	2,189	+5.6%
Other operating expenses	(1,466)	(1,212)	254	+21.0%
Finance costs	(8,769)	(5,384)	3,385	+62.9%
Income tax expense	(4,164)	(2,462)	1,702	+69.1%
Profit for the year before deficit on the
revaluation of PLB licences and
(provision for)/reversal of impairment of
public bus licences	24,378	59,595	(35,217)	-59.1%
Deficit on revaluation of PLB licences	(34,980)	(20,460)	14,520	+71.0%
(Provision for)/Reversal of impairment of
public bus licences	(1,350)	150	(1,500)	N/A
(Loss)/Profit for the year	(11,952)	39,285	(51,237)	N/A
Profit for the year before Government
subsidies, deficit on revaluation of PLB
licences and (provision for)/reversal of
impairment of public bus licences	24,378	14,189	10,189	+71.8%

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