Examples of KCRC System in a sentence
The applicable percentage will vary according to the amount of revenue generated from the KCRC System for each financial year as follows: for the first HK$2.5 billion of revenue generated from the KCRC System, the applicable percentage will be 0.0%; for the next HK$2.5 billion, the applicable percentage will be 10.0%; for the next HK$2.5 billion, the applicable percentage will be 15%; for revenue generated from the KCRC System above HK$7.5 billion, the applicable percentage will be 35.0%.
The Company believes that the structure also offers some protection against future adverse changes in patronage and fares of the KCRC System as explained below.The payment structure of the rail component includes the Upfront Payments, the Fixed Annual Payments and the Variable Annual Payments for the Concession Period.
In addition, the Economic Intelligence Unit, a third party economic research and advisory firm, forecasts the average CCPI growth for Hong Kong between 2008 and 2030 to be approximately 2.4% per annum.Purely for illustrative purposes, in addition to the Zero Growth Case scenario described above, we have considered the impact of growth on the illustrative net present value of the Adjusted KCRC System Cashflows.
We have assumed: (i) a range of nominal growth rates of between 1.0% and 3.0% which are applied to the steady-state, pro-forma Year 4 cashflow for KCRC System of HK$530 million calculated in Table 2 above; and (ii) a WACC range of between 9.0% and 11.0%.
The final outcome could be better or worse than our illustrative calculations depending, in particular, on the actual incremental rail and related cashflows of the KCRC System achieved as compared to our illustrative, Adjusted KCRC System Cashflows.
The applicable percentage will vary according to the amount of revenue generated from the KCRC System for each financial year as follows: for the first HK$2.5 billion of revenue generated from the KCRC System, the applicable percentage will be 0.0%; for the next HK$2.5 billion, the applicable percentage will be 10.0%; for the next HK$2.5 billion, the applicable percentage will be 15.0%; for revenue generated from the KCRC System above HK$7.5 billion, the applicable percentage will be 35.0%.
Such Variable Annual Payments will provide the Company with a certain degree of protection against the risks associated with future adverse changes in the KCRC System Revenue as the amount of the Variable Annual Payments will vary with the revenue attributable to the KCRC System.
Based on our illustrative analysis, the internal rate of return for the Adjusted KCRC System Cashflows over the illustrative Concession Period in the Zero Growth Case scenario is approximately 14.2%, which is significantly above our assumed, estimated WACC of approximately 9.1%.The above net present value and internal rate of return calculations are illustrative only and depend on the underlying assumptions of our analysis.
The rail component of the Rail Merger has been specially structured as a Service Concession, thereby allowing the Company to acquire the rights to access and operate the KCRC System and related assets whilst not assuming KCRC’s existing debts (except as joint co-obligor with KCRC in relation to the CBLs) nor paying a significantly greater upfront payment.
For example, if the applicable rate of inflation throughout the illustrative Concession Period is 3.0% per annum, below the historical average for Hong Kong of approximately 5.0% (between 1981 and 2006), then the illustrative net present value of the Adjusted KCRC System Cashflows would be approximately HK$4,117 million, assuming a discount rate of 9.0%, even if there is zero real growth in the cashflows.