1988 — Page 7

CHAIRMAN'S STATEMENT

Results and dividends

The operating profit for the year ended 31 December 1988 was HK$103.6 million, compared with HK$89.1 million in 1987, an increase of 16.3%: Taxation absorbed HK$14.6 million (1987 - HK$4.1 million), leaving a consolidated net profit of HK$89.0 million for the year, an increase of 4.8% over the last year. Earnings per share was 51.1 cents.

The annual professional valuation of the group's investment properties was carried out at the end of 1988 by an officer of the company holding a recognised professional qualification. The continued strength of the Hong Kong property market in 1988 was reflected in a net valuation surplus of HK$56.5 million which has been credited to investment property revaluation reserve. Total shareholders' funds at year end amounted to HK$1,026.5 million and net asset value per share was HK$5.6.

The directors recommend a final dividend of 19 cents per share. This will give total dividends paid in respect of 1988 of 25 cents per share.

Operational review

Ferry operations and related business

Due to the suspension of five loss-making routes, three in 1987 and two in 1988, the patronage on the cross harbour passenger ferry services declined by 2.1% to 49 million passengers for the year. The outlying districts passenger ferry services carried 16.3 million passengers, an improvement of 4.7% over 1987. The cross harbour car ferry services carried 5.5 million vehicles as compared with 4.8 million vehicles in last year, representing an increase of 13%. Revenue earned from floating night clubs and restaurants, rental of kiosks on piers, ferry charter hire, advertising on piers and ferries, parking services on vehicular ferry concourses and other minor sources of income increased by 18.7% from HK$33.5 million in 1987 to HK$39.8 million in 1988.

Although the average loading factor of the hoverferry services to Shekou, Whampoa and Zhoutoujui remained stable throughout 1987 and 1988, the patronage for the year decreased by 3.7% to 300,000 because of a reduction in journeys operated.

The large hoverferry service to Macau carried 943,000 passengers during the year, showing no significant change when compared with the year before.

During the year one triple deck passenger ferry with a carrying capacity of 1,582 passengers entered service, bringing the group's ferry fleet to a total of 80.

The shipyard business achieved good results in 1988 with no material change in sales because of improved profit margin. Sales outside the group accounted for 40% of turnover from this activity.

The whole division contributed a total of HK$59.3 million to the group profit before interest and taxation, an increase of 3% over 1987.

Trading and services

The supermarket chain recorded a growth of 24.2% in revenue in spite of there being no expansion in the number of outlets and trading area during the year. One new store was opened but one unprofitable store was closed during the year, thus maintaining a total of 14 outlets at the end of 1988. The trading area dropped from about 3,990 m2 to 3,950 m2.

This division earned a profit before interest and taxation of HK$12 million, an increase of 8.7%.

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