CMB_1987 — Page 8

CHAIRMAN'S STATEMENT

Group Results and Dividend

The Board of Directors announces that the audited consolidated profit for the year ended 30th June 1987 after transfer to Development Fund in accordance with the Profit Control Scheme amounted to $46.74 million compared with $47.84 million for the previous year.

The Directors will recommend to shareholders at the forthcoming ordinary yearly meeting to be held on 18th December 1987 the payment of a final dividend of 32 cents per share. This, together with the first interim dividend of 20 cents per share. a special dividend of 5 cents per share and a second interim dividend of 18 cents per share already paid, makes a total dividend for the year of 75 cents per share compared with 71 cents per share for the previous year.

Result of Bus Operation

Bus operating profits increased from $20.52 million in 1986 to $73.22 million in 1987. In accordance with the Profit Control Scheme, the sum of $27.50 million was transferred to the Development Fund, which had been virtually exhausted on 1st July 1986 by the poor operating result due to the loss of patronage to the MTR Island Line extension and the consistent low fare structure maintained by the Company during this period.

This improvement in profit was earned through the effect of the revision of cross-harbour bus fares in February 1987, the rationalisation of bus services to match the reduction in passenger demand following the opening of the MTR Island Line and rigorous control of costs.

Traffic Activities

The number of passengers carried during the year under review fell by 3.6 per cent from 327.1 million to 315.3 million, partly due to the opening of the final stage of the MTR Island Line. The kilometres operated increased slightly from 54.9 million to 55.6 million.

In order to serve the new estate at Lei Tung in Southern District, two new bus routes were introduced during the year. These were Route 97 (Lei Tung Central) and Route 98 (Lei Tung - Aberdeen).

Bus Fleet

After further rationalisation, the Company's total fleet at 30th June 1987 stood at 1,011 buses with a total carrying capacity of 115,165. Twenty 3-axle high-capacity double-deck buses were purchased during the year under review and the body assembly programme is in progress.

Extension of Franchise

Pursuant to Section 6 of the Public Bus Services Ordinance (Cap. 230) the Company has recently submitted to Government an application for our franchise to be extended for a further period of two years up to 31st August 1991.

Inland Lot 5532, Tsat Tse Mui Road and Inland Lot 7178, King's Road, North Point

The question of redeveloping of Inland Lot 5532 and Inland Lot 7178 is under active consideration. Inland Lot 5532 has a site area of 5,890 square metres (63,400 square feet) and Inland Lot 7178, has a site area of 3,379.23 square metres (36,374 square feet). As these Lots fall within a Comprehensive Redevelopment Area, an application was made under Section 16 of the Town Planning Ordinance (Cap. 131) to the Town Planning Board for permission to redevelop these two sites into residential, office and retail complexes. The Town Planning Board has recommended that a revised scheme be submitted to incorporate several points of detail that need to be resolved.

6