CMB_1994 — Page 10

Chairman's Statement (Continued)

INLAND LOT 5532, TSAT TSE MUI ROAD, AND INLAND LOT 7178, KING'S ROAD, NORTH POINT

which

The redevelopment of the sites at Tsat Tse Mui Road, North Point and at King's Road, North Point by the joint venture company is 40 per cent owned by the Group and 60 per cent owned by Swire Properties Limited is in progress. Detailed terms on the land exchange are still being discussed with Government. Construction work is in progress pending a successful outcome in the land exchange negotiation.

INLAND LOT 7550, KING'S ROAD, NORTH POINT

During the year the Company pursuant to the resolution of the shareholders of the Company in December 1993, completed the sale of the site at King's Road, North Point to a joint venture company which is 50 per cent owned by the Group and 50 per cent owned by Swire Properties Limited and which was established to purchase and develop the site for commercial purposes. The full consideration of HK$360 million was received in January 1994.

Town Planning approval for a commercial/office building has been obtained. Negotiation is in progress with Government on modification to the lease to permit such redevelopment.

FUTURE OUTLOOK

With the commencement of the Company's current franchise on September 1st, 1993, 26 routes were withdrawn from our network. The Company is continuing to review bus operations and is implementing a programme of service improvements and rationalisation measures to counteract the effects of competition and to improve operating efficiency.

Traffic congestion continues to disrupt our services. It causes inconvenience to passengers, continued problems for our scheduling staff and increases the attractiveness of non-road based public transport. The Company is therefore attempting to persuade Government to devote more efforts to design and implement traffic management schemes to reduce traffic delays and promote bus priority schemes. In the meantime, however, the Company will continue to consider the re-routing and rescheduling of services and the rationalisation of bus stops, in order to improve journey times and operating efficiency.

Expansion of services to cater for the new and increasing developments on Hong Kong Island, including Yiu Tung Estate, Siu Sai Wan, South Horizons and Chai Wan East should help to offset the loss of passengers to other public transport modes. The Company is also planning to expand its operation of Cross-Harbour services, and in October 1994 we commenced the joint operation of a new route, Route 691 (Hang Hau (North) to Central (Macau Ferry)).

The Company's current franchise will expire on 31st August, 1995. The Company is in discussions with Government concerning a franchise thereafter.

APPRECIATION

The Directors appointed by the Governor under the Public Bus Services Ordinance were the Commissioner for Transport, Mr. Rafael HUI Si-yan, J.P., and the Deputy Secretary for Transport (Transport Services), Mr. Kevin MAK lu-kwan and his successor Mrs. Carrie YAU TSANG Ka Lai, J.P., from 30th March, 1994. On behalf of the shareholders and my fellow Directors I would like to express our appreciation of their participation in the deliberations of the Board.

In conclusion, I would like to thank our loyal staff for their hard work and dedication to serving the travelling public during a very challenging year.

Hong Kong, 8th November, 1994

NGAN Shing-kwan Chairman

Page 10Page 11