1984 — Page 5

Chairman's Statement

Ferry Franchise

On the 27th March 1984, the Governor in Council granted the Company a new franchise under The Ferry Services Ordinance for the period 1st April 1984 to 31st March 1999.

Operating Results

The Group's consolidated net profit after tax for 1984 was $41.2 million, an increase of 67.4% from $24.6 million in 1983 as restated for changes in accounting policies detailed in Note 1 on the Accounts on page 11 of this Annual Report. The improved results for 1984 were mainly due to:

1. economies achieved from cost reduction

schemes launched in 1983;

2. fare revision introduced on 1st January

1984;

3. increase in cross harbour vehicular traffic; 4. increased rent from properties;

5. exchange gain.

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. Even with the improved contribution from ferry services, the return on net assets from ferry operations was64% against a loss of 0.5% for 1983 restated.

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, same as for 1983. Members registered in the Company's Share Register on the 27th March 1985 will be entitled to the above distribution.

In addition, your Directors have recom- mended that a Bonus Issue of one ordinary share for every five ordinary shares held by shareholders who are registered in the Company's Share Register on the 27th March 1985.

Subject to unforeseen circumstances, your Directors anticipate that the total dividends for 1985 will be not less than 15 cents per share on the enlarged capital.

The earnings per share was 29.7 cents as compared with 17.7 cents per share for 1983 as restated.

Traffic

Traffic carried on your ferries during 1984 compared with 1983 was as follows:-

Cross Harbour Routes

55.4 million passengers, a decrease of 14.2%.

4.5 million vehicles, an increase of 33.5%.

Outlying Districts Routes

17.1 million passengers, a decrease of 10.5%.

The general decrease in passenger traffic was partly attributed to fare increase as from 1st January 1984 and was particularly substantial on the Tsuen Wan and Sai Wan Ho ferry routes since the new piers opened during the year were more inaccessable on new undeveloped reclamations than the old ones.

Fleet

As at the 31st December 1984, your fleet in service numbered 86 vessels.

During the year, 2 new vehicular ferries entered service and 3 obsolete ferries were sold. 15 obsolete vessels await disposal.

Ferry Services

Central Tai O (via Tuen Mun, Sha Lo Wan) Excursion Service on Saturday after- noons commenced as from 4th February 1984.

Tuen Mun Central Hoverferry Service commenced night sailings as from 1st March 1984.

A new vehicular ferry service between Sai Wan Ho and Kwun Tong commenced operations on 1st April 1984.

China Ferry Services

Three hoverferry services now operate to China from Tai Kok Tsui Ferry Pier in Kowloon, namely to Zhoutoujui in Guangzhou, to Whampoa and to Shekou. In November 1984, the agreement to operate the hoverferry service between Hong Kong/ Shekou was extended for a further period of three years.

A

new hoverferry service commenced on 15th August 1984 between Shatin and Meisha on Mirs Bay. It was temporarily suspended on 17th December 1984 due to seasonal monsoon conditions.

Property

HYFCO Industrial Building Block III was completed during the year and is 50 percent let. The gross floor area per unit ranges from about 7,955 sq. ft. to 8,310 sq. ft.

Subsidiary Companies

Crestbridge Estates Ltd. Silvermine Beach Hotel at Mui Wo, Lantau Island owned by Crestbridge and operated by Silvermine Enterprises Ltd. was popular with holiday

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