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Hong Kong Ferry (Holdings) Co. Ltd.
Commentary on Financial Results
The following comments should be read in conjunction with the Audited Consolidated Financial
Statements of Hong Kong Ferry (Holdings) Company Limited and the related notes on the
accounts.
RESULTS OF OPERATIONS
Total turnover of the Group amounted to HK$889.2 million, showing a decrease of 7.7% as compared to that recorded in the previous year. The decrease in turnover of the ferry operations and related businesses of HK$243.5 million was partly offset by the increase in turnover of the property development and investment businesses of HK$176 million. Profit after taxation amounted to HK$121.1 million, representing an increase of 144% as compared to that recorded in the previous year. If the write-off of assets relating to the Central Pier development project and expiry of ferry franchise were excluded from the results in 1998, it represented an increase of 4.2% as compared to HK$116.2 million recorded in the previous year.
The result was mainly attributed to the profit realised out of the first instalment of HK$202.5 million received from the disposal of 50% of the sales proceeds of the domestic portion of the 201 Tai Kok Tsui Road Redevelopment (the "Disposal"), rental income from investment properties and interest income from bank deposits.
The change-over from franchised to licenced ferry services helped to improve the results of the Ferry Operations. The reduction in the number of routes operated led to a drop in local ferry patronage by 32% from 22.6 million in 1998 to 15.3 million in this year. Rental income from industrial buildings dropped by over 30% as a result of the redevelopment of the Tai Kok Tsui site and a decrease in the occupancy rate prior to redevelopment. The operating profit of the Travel Operations increased by 43% while the loss of the Silvermine Beach Hotel was reduced by 44% as compared to that recorded in the previous year. The Shipyard Operations recorded a loss for the year while the Trading Operations showed a decrease in operating profit of 73% as compared to that recorded in the previous year.
LIQUIDITY AND FINANCIAL RESOURCES
As of 31 December 1999, shareholders' funds of the Group showed a decrease of 10.6% from that recorded in 1998 and amounted to HK$3,899 million which was attributed primarily to the diminution in value of the properties under development of the Group.
Funding for the Group's activities in the year under review was mainly generated from rental on investment properties, interest income on deposits, proceeds received from the Disposal. Payment of the land premium for 201 Tai Kok Tsui Road Redevelopment during the year was funded by the Group's internal resources and bank borrowings, which as at 31 December 1999 stood at HK$800 million.