1999 — Page 13

Chairman's Statement

Hong Kong Ferry (Holdings) Co. Ltd.

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I have pleasure to present to the shareholders my report on the operations of the Group.

PROFIT

The Group's consolidated profit after taxation for the year ended 31 December 1999 amounted

to HK$121.1 million, representing an increase of 4.2% from the consolidated profit after taxation

(excluding the exceptional loss) of HK$116.2 million in 1998. The profit per share was 34.0 cents for

the year.

DIVIDENDS

The Board of Directors recommended a final dividend of 20 cents per share. This dividend, together

with the interim dividend of 8 cents per share already paid, will make a total distribution of 28

cents for the full year.

BUSINESS REVIEW

There were two important new developments in the Group's businesses during the year. Firstly,

the Group accepted the Government's proposed land premium in respect of the 201 Tai Kok Tsui Road redevelopment ("the Redevelopment") and paid an amount of HK$2.038 billion. Subsequently, the Group disposed of its entitlement to 50% of the sales proceeds of the domestic portion of the Redevelopment to subsidiaries of Henderson Land Development Company Limited

for a total consideration of HK$1.5 billion. Secondly, the Group entered into agreements with

New World First Ferry Services Company Limited ("NWFF") for the sale of certain vessels and the

transfer of the licences to operate all eight passenger ferry routes to NWFF with effect from 15

January 2000.

Ferry Operations

During the year, the loss from local ferry services for the first 3 months operated under the ferry

franchise was HK$7.8 million. However, local ferry services operated under the new ferry licences,

which commenced on 1 April 1999, recorded a profit of HK$11.1 million. The other ferry operations

including the Macau and China ferry services showed a loss of HK$3.4 million for the year.

On 15 January 2000, the local passenger ferry services were handed over to NWFF smoothly and the majority of the crew were also recruited by NWFF. On the local ferry operation, the Group

retains the dangerous goods vehicular ferry services.

Property Operations

A profit of HK$64 million was booked for the year out of the first instalment received of HK$202.5 million in respect of the disposal of the entitlement to 50% of the sales proceeds of the domestic

portion of the 201 Tai Kok Tsui Road mentioned above.