1996 — Page 86

Chairman's Statement

I am pleased to report that in 1996 our Company achieved good results. We continue to benefit from actions driven by our strategic emphasis on on-going enhancement of the quality of our operations, our services and our bus fleet. This emphasis forms the cornerstone of our business objective, which is to provide top level service to our customers, offering them an efficient, accessible means of transport at a reasonable price. Our accomplishments in 1996 are important in the on-going fulfilment of this objective; they also have added significance in the context of the unique opportunities that lie ahead for our Company and Hong Kong in 1997 and beyond.

Results for the Year

The Group's profit attributable to Shareholders for the financial year ended 31 December 1996 was HK$527.7 million (1995 - HK$461.1 million). The profit from franchised bus operations for the year, after the transfer of HK$1.8 million from the Development Fund (1995 - transfer of HK$2 million to the Development Fund), amounted to HK$525.5 million (1995 - HK$461.1 million), representing an increase of 14 per cent over the previous year. Earnings per share for the year amounted to HK$1.31 (1995 - HK$1.14).

The Company's bus operating profit for the year fell short of the permitted return by HK$1.8 million (1995 - excess of HK$2 million). The accumulated shortfall brought forward from previous years was HK$44.4 million. Subject to the Government's agreement, the shortfall is recoverable from the Development Fund in future years.

The Scheme of Control profit, after the deduction of the HK$12 million contribution to the Elderly Concessions Scheme and the transfer of HK$1.8 million from the Development Fund, represents a return of 15.6 per cent on the 1996 average net fixed assets value for Scheme of Control purposes. Under the existing basis of calculation of the permitted return, leasehold land of the Company for Scheme of Control purposes is stated either at cost or, if acquired before 1 July 1959,

at its 1959 valuation.

Dividends

At the forthcoming Ordinary Yearly Meeting, the Directors will recommend the

payment of a final dividend of 80 cents per share for the year ended 31 December

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