1982 — Page 5

Chairman's Statement

Operating Results

The Group's consolidated net profit after tax was $34.7 million as compared with $39.4 million for 1981, a decrease of 11.9% over the previous year. This was mainly due to:- 1. Delays in granting of fare increases and of

termination of the Mei Foo Sun Chuen ferry route by the Government.

2. Loss of passengers as a result of the opening

of the Tsuen Wan extension of the Mass Transit Railway in May 1982.

3. Higher operating costs resulting from the

weakening Hong Kong Dollar and inflation. The contribution to Group profit from the different sectors of your Group of Companies' activities is set out in page 21 of this Annual Report. The return on net assets from ferry operations had diminished to 0.6% (1981 - 4.1%).

Your Directors have recommended a final dividend of 10 cents per share which together with the interim dividend paid, make a total distribution of 15 cents per share as against a distribution in 1981 of 15 cents per fully paid share and 7.5 cents per partly paid share.

The earnings per share was 25.6¢ as compared with 34.6¢ per share for 1981 after adjustment for the second call of the 1981 Rights Issue paid up during the year and the weighting of the partly paid shares.

Members registered in the Company's Share Register on the 23rd March 1983 will be entitled to the above distribution.

Traffic

Traffic carried on our ferries during 1982 compared with 1981 are as follows:- Cross Harbour Routes

75 million passengers, a decrease of 10.2% or 8.5 million passenger journeys. 3.63 million vehicles, as against 3.56 million vehicles, an increase of 2.0%.

Outlying Districts Routes

22.45 million passengers, a decrease of 4.1%. Excluding the loss of 3.5 million passengers or 33.9% on the Hong Kong - Tsuen Wan

Tsing Yi route, the total increase in passengers on these routes is 2.5 million or 18.7%.

Fleet

As at the 31st December, 1982, your ferry fleet in service numbered 98 vessels.

During the year, 1 obsolete ferry and 1 water taxi were disposed of, 9 obsolete ferries were

laid up pending disposal and 16 new ferries entered service comprising of:-

Double Deck Vehicular Ferries Double Deck Passenger Ferries HM2 Mark IV Hoverferries

Ferry Services

As foreseen, the opening of the Tsuen Wan extension of the Mass Transit Railway in May 1982 had resulted in loss of passengers on a number of ferry routes. After prolonged negotiations, permission was given by Government to terminate the Mei Foo Sun Chuen route on 1st January 1983. Steps were also taken during the year to reduce operation hours and frequency of sailings on other services affected, so as to effect economies to offset decreased traffic.

China Ferry Services

In November 1982, a hoverferry service to Whampoa was resumed with 2 round sailings per day, making a total of three hoverferry routes to China.

Property

It was decided to proceed with Block III HYFCO Industrial Building as it was partly required for shipyard facilities, but to postpone Block IV in view of present oversupply of factory premises in Hong Kong.

Subsidiary Companies

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Crestbridge Estates Ltd. became a wholly owned subsidiary company during the year and Lot No. 648 in D.D.2, Lantau Island on which the Silvermine Beach Hotel stands was transferred to this Company during the year. The Hotel obtained its occupation permit late in 1982. Silver Mine Enterprises Ltd. was granted a licence to operate the Hotel which is expected to commence business in March 1983.

HYFCO Development Co., Ltd.'s 10 houses at Leyburn Villas, Cheung Sha will also be licensed to Silver Mine Enterprises Ltd. to serve as annexes to the Silvermine Beach Hotel.

The Hong Kong Shipyard Ltd. continued to maintain your Company's fleet and secured three orders from outside the Group for the building of 7 launches.

HYFCO Trading Services Co. Ltd. during the year opened two new mini-supermarkets at Whampoa Estate and Cosmopolitan Estates in East and West Kowloon, respectively in addition to maintaining mini-supermarkets at Jubilee

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