XN000022-1976-08-04 — Page 2

WEDNESDAY, AUGUST 4, 1976.

SINGLE ONE CLASS FARE FOR H.Y.F. CROSS HARBOUR SERVICES

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THE LEGISLATIVE COUNCIL TODAY APPROVED A MOTION TO INTRODUCE A SINGLE ONE CLASS FARE TO THE CROSS HARBOUR SERVICES OF THE HONG KONG AND YAUMAT! FERRY COMPANY.

ALSO APPROVED WAS THAT THE COMPANY'S 25 PER CENT ROYALTY PAYMENT ON ITS NET PROFITS AND ITS $20,000 MONTHLY FEE FOR ITS EXCLUSIVE NORTH POINT/HUNG HOM FERRY SERVICE IN THE 1975-79 PERIOD BE WAIVED.

THE SINGLE ONE CLASS FARE WILL COME INTO EFFECT ON SEPTEMBER 1, 1976. IT WILL BE 30 CENTS FOR ADULTS AND 20 CENTS FOR CHILDREN FROM THREE TO 16.

THE SERVICES TO BE AFFECTED INCLUDE ALL THE CROSS HARBOUR SERVICES EXCEPT THOSE BETWEEN JUBILEE STREET FERRY PIER AND KWUN TONG FERRY PIER ON WHICH A ONE CLASS FARE OF 50 CENTS IS ALREADY CHARGED.

MOVING THE RESOLUTION IN THE COUNCIL TODAY UNDER THE HONG KONG AND YAUMATI FERRY COMPANY (SERVICES) ORDINANCE, THE ACTING FINANCIAL SECRETARY, THE HON. DEREK JONES EXPLAINED THAT A PREVIOUS FORECAST MADE IN 1974 OF AN AVERAGE ANNUAL RETURN ON THE COMPANY'S NET FIXED ASSETS OF ABOUT 8 PER CENT UNTIL 1979 HAS BEEN SHOWN TO BE TOO OPTIMISTIC.

+NOT ONLY HAS THE VOLUME OF BOTH PASSENGER AND VEHICULAR TRAFFIC USING THE COMPANY'S CROSS HARBOUR SERVICES CONTINUED TO DECLINE, BUT OPERATING COSTS HAVE ALSO CONTINUED TO INCREASE.

+THUS THE NUMBER OF PASSENGERS CARRIED ON THE COMPANY'S HARBOUR SERVICES FELL BY 7 PER CENT IN 1975 COMPARED WITH 1974, THAT IS FROM 131 MILLION IN 1974 TO 121 MILLION IN 1975, WHILE THE VEHICULAR FERRY SERVICES CARRIED A HALF A MILLION FEWER VEHICLES IN 1975 THAN IN 1974, OR A DECLINE OF 13 PER CENT.

+AT THE SAME TIME, THE PRICE OF FUEL OIL CONTINUED TO INCREASE, BY SOME 12 PER CENT, BETWEEN JULY 1974 AND JULY 1976,+ MR. JONES SAID.

IN THE LIGHT OF THESE ADVERSE TRENDS, HE CONTINUED, THE- COMPANY'S RATE OF RETURN WAS NO MORE THAN 5.1 PER CENT ÎN 1974, AND 5.4 PER CENT IN 1975.

MOREOVER, IN 1975 THE PROFITABILITY OF ITS FERRY OPERATIONS TAKEN ON THE IR OWN WAS EVEN LESS, SINCE, OF THE TOTAL NET PROFIT OF $6.2 MILLION, SOME $1.4 MILLION ACCRUED FROM DIVIDENDS FROM SUBSIDIARY COMPANIES AND APPROXIMATELY $4 MILLION FROM OTHER NON-TRAFFIC RELATED SOURCES, LEAVING ONLY $800,000 AS BEING ATTRIBUTABLE TO THE FERRY OPERATIONS AS SUCH.

THE MEASURES APPROVED TODAY WERE EXPECTED TO IMPROVE THE COMPANY'S FINANCIAL POSITION BY SOME $4 MILLION PER ANNUM AND THOUGH NOT SUFFICIENT WERE CONSIDERED ESSENTIAL AS A FIRST STEP TOWARDS RESTORING THE COMPANY TO REASONABLE PROFITABILITY.

/FURTHER