WEDNESDAY, AUGUST 4, 1976
FURTHER PROPOSALS, WHICH WOULD RESULT FROM A DETAILED
REVIEW OF THE WHOLE OF THE COMPANY'S OPERATIONS NOW BEING UNDERTAKEN, WOULD BE SUBMITTED TO THE COUNCIL AS SOON AS THEY HAVE BEEN FULLY WORKED OUT AND EVALUATED, HE ADDED.
EVEN WITH THE PROPOSALS APPROVED BY LEGISLATIVE COUNCIL TODAY. +THE MOST RECENT FORECAST OF THE COMPANY'S FINANCIAL POSITION SHOWS THAT ITWOULD BE EXPECTED TO EARN ONLY SOME THREE PER CENT ON ITS NET FIXED ASSETS IN 1976, AND THAT THERE WOULD BE A LOSS IN 1977 WHICH, SHORT OF FURTHER REMEDIAL MEASURES, WOULD STEADILY INCREASE THEREAFTER,+ MR. JONES CONTINUED.
+I AM SURE HONOURABLE MEMBERS WILL AGREE THAT THIS
IS A SITUATION THAT CANNOT BE ALLOWED TO DEVELOP AND I CAN ASSURE THEM THAT CONSULTATIONS ARE NOW BEING HELD BETWEEN THE GOVERNMENT AND THE COMPANY TO WORK OUT THE NECESSARY REMEDIAL MEASURES TO PUT THE COMPANY'S FINANCES ON A SOUNDER FOOTING,+ HE SAID.
THE PROPOSALS APPROVED BY THE COUNCIL TODAY, WHICH HAVE THE SUPPORT OF THE GOVERNMENT AND OF THE TRANSPORT ADVISORY COMMITTEE, WERE STEPS WHICH SHOULD BE TAKEN IMMEDIATELY AS AN INTERIM MEASURE TO IMPROVE THE COMPANY'S CASH FLOW POSITION, HE ADDED.
ON THE QUESTION OF ROYALTY, MR. JONES SAID IT APPEARED THAT, FOR TAX PURPOSES, A LOSS WAS MADE BY THE COMPANY IN 1975 AND THAT NO ROYALTY WOULD BE PAYABLE FOR THAT YEAR.
+NEVERTHELESS, IN VIEW OF THE LOW RATE OF RETURN ACHIEVED BY THE COMPANY, IT IS CONSIDERED NECESSARY FORMALLY TO ABOLISH THE ROYALTY REQUIREMENT FOR THE REMAINING FIVE YEARS OF THE COMPANY'S FRANCHISE PERIOD, AS THIS WILL ASSIST ANY
FURTHER MEASURES WHICH MAY BE TAKEN IN THE FUTURE TO IMPROVE THE COMPANY'S PROFITABILITY, + HE SAID.
WAIVING THE ROYALTY AND THE MONTHLY FEE OF $20,000 FOR THE NORTH POINT/HUNG HOM SERVICE FOR THE YEARS 1975 TO 1979 MR. JONES SAID, IT WOULD BE IN HARMONY WITH THE TREAMENT ALREADY ACCORDED TO THE 'STAR' FERRY COMPANY, THE BUS COMPANIES AND HONG KONG TRAMWAYS.+
THE INTRODUCTION OF THE SINGLE ONE CLASS FARE WOULD PRODUCE AN ESTIMATED ADDITIONAL REVENUE OF ABOUT $2.5 MILLION EACH YEAR AND WOULD SAVE ABOUT $1 MILLION PER ANNUM IN STAFF AND ADMINISTRATIVE COSTS.
THE HONG KONG AND YAUMATI FERRY COMPANY HAS PROPOSED TO IMPROVE THE FACILITIES ON THE PRESENT LOWER DECKS OF ITS CROSS HARBOUR VESSELS AND TO SPEND SOME $1.5 MILLION ON MODIFICATIONS.
THESE IMPROVEMENTS WERE EXPECTED TO TAKE ABOUT A YEAR TO COMPLETE, BUT INVIEW OF THE NEED FOR IMMEDIATE STEPS TO IMPROVE THE COMPANY'S FINANCIAL POSITION, IT WAS FELT THAT THE IMPLEMENTATION OF THE ONE-CLASS SYSTEM SHOULD NOT BE DELAYED BEYOND SEPTEMBER 1, MR. JONES SAID.
+THERE SHOULD, HOWEVER, USUALLY BE SUFFICIENT ROOM ON THE PRESENT FIRST CLASS DECK FOR ALL PASSENGERS WHO WISH TO USE IT AND I SHOULD EMPHASISE THAT THE NECESSARY MODIFICATIONS TO VESSELS WILL BE EFFECTED AS QUICKLY AS POSSIBLE,+ HE ADDED.
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