1989 — Page 8

CHAIRMAN'S STATEMENT (Continued)

Because of the substantial revenue losses incurred after the opening of the Eastern Harbour Crossing and increases in operating costs, an across-the-board increase in ferry fares of about 20% was introduced on 1 November 1989.

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 improved by 28.4% from HK$39.8 million in 1988 to HK$51.2 million in 1989.

The franchised ferry services earned a return on investment of 9.5% (1988 - 10%) for the year, before charging the exceptional item but after deducting profits tax at the prevailing standard rate. About 60% of the said profit was generated by the non-franchised activities.

The hoverferry services to Shekou, Whampoa and Zhoutoujui carried 259,000 passengers in 1989, a drop of 13.6% due to a further reduction in journeys operated.

Patronage on the large hoverferry service to Macau decreased by 19.3% to 771,000 passengers.

The shipyard business achieved satisfactory result during the year. Sales outside the group accounted for 25.7% of turnover from this activity.

The whole division contributed a total of HK$52.8 million to the group profit before interest and exceptional item, a drop of 10.9% from 1988.

Trading and services

With no material changes in the number of outlets and trading area, the supermarket chain managed to achieve healthy growth in sales in 1989.

This division earned a profit before interest and exceptional item of HK$11.2 million, a decrease of 6.4%.

Property investment

All the group's industrial and residential premises were fully leased during the year at satisfactory rental levels. Profit before interest and exceptional item increased by 63.3% to HK$49.2 million because of the completion of the fourth block of industrial building and lease reversions during the

year.

Travel and others

Since our strength in the tour business was in the China market, the performance of this division was badly hurt by the June incident in China. Before accounting for interest and exceptional item, this division did not make any contribution to group profits in 1989 whereas a profit of HK$2.0 million was earned in the year before.

Employees

At the end of 1989, the group employed 2,059 employees. On behalf of shareholders and directors, I thank them for their continuing loyalty, support and hard work.

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