CMB_1996 — Page 13

Chairman's Statement (Continued)

INLAND LOT 8849, TSAT TSZ MUI ROAD, NORTH POINT

The joint venture company, which is 40 per cent owned by the Group and 60% owned by Swire Properties Limited, commenced the sale of the residential units in September. A total of 271 units were sold in the first and second sales launch. The residential buildings are due to be completed by the end of the year. Leasing of the retail centre is progressing and the centre is scheduled to open early next year. Construction work on the office is progressing with completion scheduled for the middle of next year.

INLAND LOT 7550, KING'S ROAD, NORTH POINT

The basement and foundations of the commercial/office building on Inland Lot 7550, which is 50% owned by the Group and 50% owned by Swire Properties Limited, have been completed. The lease modification premium has been agreed and work has commenced on the superstructure. Completion of the building is scheduled for mid 1998.

ABERDEEN INLAND LOT NOS. 338 AND 339, WONG CHUK HANG ROAD, ABERDEEN

The foundation works for an industrial building on Aberdeen Inland Lot Nos. 338 and 339, which are 50% owned by the Group and 50% owned by Swire Properties Limited, are nearing completion and work on the pilecaps is scheduled to commence in December.

FUTURE OUTLOOK

With the commencement of the Company's new three-year franchise on 1st September, 1995, 14 routes were withdrawn from our network. The Company is continuing to review bus operations and is implementing a programme of service improvements including increasing the number of air-conditioned vehicles in the fleet and rationalisation measures to counteract the effects of competition and to improve operating efficiency.

Traffic congestion continues to disrupt our services causing inconvenience to passengers, continued problems for our scheduling staff and increases the attractiveness of non-road based public transport. The Company is therefore awaiting with interest the measures which Government intends to implement to address traffic congestion. We are pleased to see that Government has commissioned a feasibility study of inter-district bus only lanes and hope to see schemes implemented in the near future.

The Company has submitted plans within the Route Development Programme to expand its cross-harbour services with proposed new routes to be operated through the Western Harbour Crossing, which is planned to open within the first half of 1997. Additionally expansion of services to cater for the new and increasing residential developments on Hong Kong Island, including Yiu Tung Estate, Siu Sai Wan, Tin Wan and Chai Wan East should help to offset the loss of passengers to other public transport modes.

APPRECIATION

The Directors appointed by the Governor under the Public Bus Services Ordinance were Mrs. Lily YAM KWAN Pui-ying, J.P. who succeeded Mr. Rafael HUI Si-yan, J.P. on 3rd July, 1995 and the Deputy Secretary for Transport (Transport Services), Mr. Isaac CHOW Yiu Nam. 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, 12th November, 1996

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NGAN Shing-kwan

Chairman