Review of the Trading Fund Operation Update as at March 1997
Introduction
We have issued for Members information a review of the operation of the Trading Fund in December 1996. This report provides an update on the following aspects of the trading fund since the review was published.
the expected service performance for 1996-97
the expected financial performance for 1996-97
long term productivity targets
Expected Service Performance for 1996-97
2. The main reason for establishing trading funds is to improve the quality of service and to establish a more customer oriented culture within the funds. Trading funds continued to demonstrate their ability to respond to the need of the community and improve on their service performance as shown in the following paragraphs.
Land Registry
3. Notwithstanding the increase of property registration transactions, the Registry managed to maintain the same level of service performance as compared with last year. Regarding search of land records, the Registry was able to deliver 100% of services within 25 minutes as compared to the 96.6% in the previous year.
4. The Registrys in-house Performance Monitoring Committee closely monitors actual performance against targets. Three Customer Liaison Groups, one for private sector customers and two for public sector clients, have also been established to obtain feedback on the Registrys services and to assist in monitoring the performance targets to the satisfaction of all clients. The Registry is actively reviewing work procedures with a view to further improve and enhance its services.
5. The service performance of the trading funds key services is summarised in tabular form at Annex A.
Companies Registry
6. Despite the increase in the number of incorporations, the Registry out-performed its service targets in a number of areas as shown below -
reduce the working days required for incorporation of local companies and registration of overseas companies from 7 to 6 days and 33 days to 31 days respectively.
reduce the days required for change of name from its original target of 16 to 13 working days.
reduce the working days required for the registration of general documents relating to local and overseas companies from 19 to 17 and 25 to 20 days respectively.
7. The Registry has also introduced new service targets for the queuing time to submit documents during peak and non-peak hours. In this respect, the target during peak hours and non-peak hours are 20 and 10 minutes respectively.
8. The service performance of the trading funds key services is summarised in tabular form at Annex B.
Office of Telecommunications Authority
9. Out of the 20 service performance targets, the Authority expects to meet seven of the targets, out-perform eight of the targets and marginally miss five of the targets in 1996-97. The reasons for not achieving the targets are due to temporary shortage in manpower provision and increase in the number of applications.
10. The service performance of the trading funds key services is summarised in tabular form at Annex C.
Post Office
11. The Post Office Trading Fund has been able to improve its services in a number of areas.
12. On letter service, the Post Office Trading Fund delivered 100% outward airmail items to air carriers by the following working day and 99.6% of inward airmail within two working days after arrival at the GPO or International Mail Centre compared to its target of 99% for both service target.
13. On Parcel Service, the Post Office delivered 100% of parcels within 3 working days of the day of posting/arrival against its target of 98%.
14. On speed post service, the Post Office delivered 100% of inward items on the same day or next working day depending on the flight arrival time as compared to the target of 99%. The Post Office has served 99.93% of its customers within 10 minutes against its target of 95% in respect of counter service.
15. The service performance of the Post Offices key services is summarised in tabular form at Annex D.
Sewage Service
16. Of the five service targets set by the trading fund, the trading fund expects to achieve four of the targets. The trading funds key service performance is set out in tabular form at Annex E.
Electrical and Mechanical Services
17. There are a number of indicators used to define service quality, the significant ones being -
system availability - The service target is 99.95% in critical areas and 99% in other areas.
average response time to fault calls - The target is 15 minutes for location with EMSTF resident staff and 4 hours for urgent calls for location without resident staff.
time to repair - The target is to complete 80% of fault repair jobs within 1 day. In case of a long repair time for essential services, they will make temporary arrangements to restore the system whilst repair work continues.
18. As the Electrical and Mechanical Services Trading Fund was only set up in August 1996, we will continue monitoring its ability to deliver the targettted performance.
Expected Financial performance for 1996-97
19. As stipulated in S6(6)(C) of the Trading Funds Ordinance (Cap. 430), trading funds are required to achieve a reasonable return, as determined by the Financial Secretary, on the fixed assets employed. The objectives of setting target returns are mainly to recover the cost of capital; to ensure efficient use of resources and to facilitate the evaluation of business performance.
Land Registry
20. The registrys outturn for 1996-97 (unaudited) is 29% return on ANFA as compared to the target return of 10% mainly due to -
- the increase in revenue arising from recent substantial increase in property transactions; and
- deferral of some capital expenditure, e.g. the Document Imaging System.
Companies Registry
21. The registrys outturn for 1996-97 (unaudited) is 13.07% return on ANFA as compared to the target return of 10% mainly due to the increase in the number of company incorporations in the year.
Sewage Services
22. The trading fund expects to incur a deficit before depreciation of $40m for the year 1996-97 (unaudited) against the original projected deficit of $92m mainly due to -
- reduction in staff costs;
- lower accommodation costs; and
- deferred commissioning of SSDS Stage 1.
Office of the Telecommunications Authority
23. The Authoritys outturn for 1996-97 (unaudited) is 43% return on ANFA as compared with the target return of 14.5% due to -
- reduction of 15% in operating expenses, mainly staff costs;
- reduction of ANFA as the trading fund decided to rent office space instead of purchasing; and
- strong cash position and hence higher interest income due to renting office instead of purchasing.
Post Office
24. Due to the unexpected increase in philatelic activities as a result of the transition, the forecast return on ANFA is 39.4% (unaudited) as compared to the target return of 10.5%.
Electrical and Mechanical Services
25. The Electrical and Mechanical Services Trading Fund was established on 1 August 1996. Upon establishment of the trading fund, the management expected to achieve 9.2% return on ANFA for the first eight months of operation, which is equivalent to an annualised rate of 13.5%. Before final closing of the first eight-month accounts, the management now expects to achieve a higher return of around 11% (unaudited), or an annualised 16.5%, mainly due to savings in staff costs. The target rate of return on ANFA for the trading fund is 13.5%.
26. The financial performance of the six trading funds is summarised in tabular form at Annex F.
Long Term Productivity Targets
27. Productivity improvement is a key area in relation to the performance of Trading Funds.
28. A number of the trading funds have already established management information systems to provide basic statistics as regards sectional and divisional workload, output per staff number, unit costs etc.
29. The Land Registry plans to introduce standard costing to facilitate monitoring of productivity improvement and aims to achieve a productivity gain of 2% in medium term. The Companies Registry aims to achieve a productivity gain of 5% per annum over the medium term. The Electrical and Mechanical Services Trading Fund aims to achieve an overall improvement in productivity of 5% by the end of 1997-98 and also for the following two years. The Office of the Telecommunications Authority plans to introduce performance measures to monitor operational efficiency and staff productivity. The Authority has engaged the Efficiency Unit to devise suitable productivity targets for the Authority.
Conclusion
30. This update demonstrates that trading funds continue to improve their service standards and to pass productivity benefits onto their customers. On the financial front, nearly all trading funds are performing above the target rate of return. Indeed due to special market conditions, three of them have considerably over-achieved. As Members are aware, we have already established a Development Reserve for OFTA. We are prepared to discuss with other trading funds whether to set up similar development reserves to take account of unexpected fluctuations in operating results. We will keep Members informed of further developments in this regard.
(P0319)
Annex A
Efficiency of Trading Funds Service Performance Land Registry Trading Fund
(established on 1.8.1993)
|
1995-96
|
1996-97
|
|
Target
|
Achieved
|
Target
|
Outturn |
|
|
|
|
|
|
Registration of documents (working days) Note 1
|
20
|
97.6%
|
20
|
78.3% |
|
|
|
|
|
|
Certification (working days) Note 2
|
5
|
97.6%
|
5
|
93.4% |
|
|
|
|
|
|
Search (minutes)
|
25
|
96.6%
|
25
|
100% |
|
|
|
|
|
Note 1 - The performance pledge for registration experienced a temporary set back in the second quarter due to the teething problems of the Document Imaging System. The problem has been solved and the actual performance for the last quarter is 99.1%.
Note 2 - The slight set back in the performance pledge of certification was due to the delay in the fitting out work in the Central Search Office. However, the target for the last quarter is 100% achieved.
Annex B
Efficiency of Trading Funds Service Performance Companies Registry Trading Fund
(established on 1.8.1993)
|
1995-96
|
1996-97
|
|
Target
|
Achieved
|
Target
|
Outturn |
|
|
|
|
|
|
Incorporation of local companies ( working days)
|
7
|
6
|
7
|
6 |
|
|
|
|
|
|
General registration of documents for local companies (working days)
|
25
|
16
|
19
|
17 |
|
|
|
|
|
|
Search at express service counter (minutes)
|
20
|
21
|
20
|
20 |
|
|
|
|
|
|
Registration of Charges (working days)
|
12
|
11
|
11
|
11 |
Annex C
Efficiency of Trading Funds Service Performance Office of the Telecommunications Authority Trading Fund
(established on 1.6.1995)
|
|
1995-96
|
1996-97
|
|
Standard
Processing
Time
|
Target
|
Achieved
|
Target
|
Outturn |
|
|
|
|
|
|
|
Mobile Radio System Licence
- establishment of a new system
|
2 months
|
96%
|
96%
|
96%
|
95% |
|
|
|
|
|
|
|
Radio Dealers Licence
|
5 working days
|
95%
|
96%
|
96%
|
96% |
|
|
|
|
|
|
|
Public Non-exclusive Telecommunications Service Licence
|
14 working days
|
98%
|
98%
|
98.5%
|
96% |
|
|
|
|
|
|
|
Public Radio Communication Services Licence
|
42 working days
|
98%
|
100%
|
99%
|
98% |
Annex D
Efficiency of Trading Funds Service Performance Post Office Trading Fund
(established on 1.8.1995)
|
1995-96
|
1996-97
|
|
Target
|
Achieved
|
Target
|
Outturn# |
|
|
|
|
|
|
Local letters delivered to addressees by following working day
|
98%
|
97.7%
|
98%*
|
98% |
|
|
|
|
|
|
Outward airmail items to carriers by following working day
|
98%
|
99.5%
|
99%
|
100% |
|
|
|
|
|
|
Speedpost delivery of outward items to air carriers on same day subject to flight availability
|
98%
|
99.9%
|
100%
|
99.01% |
|
|
|
|
|
|
Counter service -
Service within 10 minutes (except specified pressure period)
|
90%
|
99.7%
|
95%
|
99.93% |
* Extended to bulk mail in 1996-97.
# For the period April 96 - February 97
Annex E
Efficiency of Trading Funds Service Performance Sewage Services Trading Fund
(established on 11.3.1994)
|
|
1995-96
|
1996-97
|
|
Target
|
Target
|
Achieved
|
Target
|
Outturn |
|
|
|
|
|
|
|
Response to complaints on blocked sewers received before noon
|
same day
|
90%
|
95%
|
95%
|
99% |
|
|
|
|
|
|
|
Response to complaints on blocked sewers received after noon
|
before noon next day
|
90%
|
94%
|
95%
|
99% |
|
|
|
|
|
|
|
Issue demand notes for sewerage connections
|
10 working days
|
98%
|
98%
|
98%
(target has been revised to 9 working days)
|
98% |
|
|
|
|
|
|
|
Initial response to written customer accounts enquiries
|
2 working days
|
80%
|
95%
|
98%
|
100% |
Annex F
Efficiency of Trading Funds Financial Performance in 1996-97
|
Trading Funds
|
Projected Financial
Performance
|
Outturn
(Unaudited) |
|
|
|
|
Land Registry
(Target rate of return on ANFA is 10%)
|
6.7% on ANFA
|
29% on ANFA |
|
|
|
|
Companies Registry
(Target rate of return on ANFA is 10%)
|
6.78% on ANFA
|
13.07% on ANFA |
|
|
|
|
Sewage Services
(Target rate of return on ANFA is 0)
|
Operating deficit of $92m (before depreciation)
|
Operating deficit of $40m (before depreciation) |
|
|
|
|
Office of the Telecommunications Authority
(Target rate of return on ANFA is 14.5%)
|
31.3% on ANFA
|
43.0% on ANFA |
|
|
|
|
Post Office
(Target rate of return on ANFA is 10.5%)
|
7.6% on ANFA
|
39.4% on ANFA |
|
|
|
|
Electrical and Mechanical Services
(Target rate of return on ANFA is 13.5%)
|
9.2% on ANFA
(or equivalent to an annualised rate of 13.5%)
|
11.0% on ANFA
(or equivalent to an annualised rate of 16.5%) |
Last Updated on 18 August 1998
