1999 — Page 14

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Chairman's Statement

Ltd.

BUSINESS REVIEW

Property Operations

The HYFCO Industrial Buildings were vacated by the end of the year to make way for the

redevelopment. Gross rental income from investment properties of the Group was HK$57.3 million

for the year.

Other Businesses

Shipyard Operations

The Shipyard Operations recorded an operating loss of HK$1.6 million for the year while a profit of

HK$9.1 million was recorded in 1998. This was mainly due to the decrease in turnover and the

heavy cost incurred in restructuring the work force.

Travel and Hotel Operations

The operating profit of the Travel Division increased by 43% to HK$4.3 million from HK$3.0 million in

1998. The operating loss of the Silvermine Beach Hotel was HK$1.0 million for the year.

Trading Operations

Due to the price war among the major supermarkets during the year, operating profit of the Trading Division decreased by 73% to HK$2.0 million from HK$7.5 million in 1998.

Interest Income

Net interest income on bank deposits was HK$43.3 million for the year.

YEAR 2000 COMPLIANCE

The modification works on Year 2000 computer compliance program were completed in December 1999. There have been no reported Year 2000 non-compliance incidents during the transition period up to and including 29 February 2000. The Group has spent about HK$5 million

on the project, the majority of which being staff costs charged to the financial periods in which

they were incurred. There was no further financial commitment as at the year end date for the

project.

PROSPECTS

The Group is in possession of a number of valuable sites and property development will provide the Group with the main source of income. The Tai Kok Tsui Road redevelopment comprises two phases. Foundation work of Phase I is in progress and the demolition of the HYFCO Industrial

Buildings of Phase II is expected to be completed in second half of 2000.

The staff quarters located at 222 Tai Kok Tsui Road will also be redeveloped into a commercial/ residential complex. Application for the land exchange has already been made. It is anticipated that the development with a site area of about 36,000 sq. ft. shall amount to a gross floor area of 324,000 sq. ft.