2013 — Page 15

Hong Kong Ferry (Holdings) Company Limited Annual Report 2013

Chairman's Statement (Continued)

Ferry, Shipyard and Related Operations

The Ferry, Shipyard and related operations achieved an increase of 21% in operating profit to HK$34 million as

compared with last year. The increase was mainly due to the sale of two oil barges during the year.

Travel Operation

Due to the occurrence of avian flu in China and the

anti-government protests in Thailand during the year, the operating results of Travel Operation regressed to a deficit of HK$3.3 million this year.

Securities Investment

The Group recorded a surplus of HK$104 million on disposal

of certain securities investments in the year of 2013.

PROSPECTS

The US economy grew at 2.5% in the fourth quarter of 2013. Unemployment rate further dropped to 6.7%. The Federal Reserve responded by announcing the reduction of bond purchases, causing the financial markets worldwide to worry about credit tightening. However, in the light of the US and

European economies still being in the recovery phase, short

to medium term interest rates are not expected to increase

substantially. Low rates are beneficial to local home buyers seeking mortgage loans.

In an attempt to regulate the economy, Premier Li Keqiang announced at the closing ceremony of the 12th National People's Congress of the People's Republic of China in

March that the target of economic growth in 2014 was

set at around 7.5% and inflation rate around 3.5%. These

parameters are expected to bring about steady growth. Some investors, however, turn cautious on their outlook for China by citing insufficient growth momentum, bad

debts in shadow banking and the need for the Renminbi to depreciate.

In Hong Kong, the economy benefited tremendously from the arrival of mainland tourists, which number increased to 54 million in 2013, representing 11.7%. Shopping, accommodation and dining bring about significant contributions and their consumption is vital to the local economy. Any policy to limit the number of mainland visitors needs to be handled with care. In respect of the local property sector, the year of 2013 witnessed a decrease

of 15% to 11,046 in the number of transactions in primary domestic property market, owing to policies such as

increased stamp duty. The slack trend of the property market is expected to continue this year.

The Chief Executive proposed in his 2014 Policy Address to

increase housing supply to 470,000 units in the coming ten

years. With increased land supply by the government, the Group wishes to purchase development sites at suitable

time to replenish the land bank. The Group plans to continue to sell the remaining units of "Green Code" and launch the sale of Hung Hom Bulkeley Street property this year. Barring

unforeseen circumstances, Green Code will bring promising

sales return to the Group this year if the occupation permit

can be procured on time.

ACKNOWLEDGEMENT

On behalf of the shareholders and the Board, I would like to

take this opportunity to express appreciation to all our staff

for their dedication and hard work during the year.

Lam Ko Yin, Colin

Chairman

Hong Kong, 18 March 2014

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