2017E — Page 13

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CHAIRMAN'S STATE

Green Code

The project under construction consists of six residential towers providing about 1,663 units with sea view or landscape view. The gross floor area of the project is about 663,000 square feet which is expected to be completed in early 2022. Merits of the project include sizeable outdoor gardens and integrated clubhouse facilities, proximity to the yacht club and the renowned international school, convenient transportation to Shenzhen via Western Corridor, between Kowloon via the highways, between Central of Hong Kong Island via Western Harbour Tunnel, and

between Chek Lap Kok Airport via the future Tuen Mun Tunnel.

Ferry, Shipyard and Related Operations

During the year under review, the Ferry, Shipyard and Related Operations recorded a profit of HK$30 million, showing a 120% increase as compared with last year. Both revenue and profit of

the shipyard business have shown increase.

Securities Investment

During the year, a profit of HK$89 million in Securities Investment was recorded mainly due to the disposal of available-for-sale securities of the Group.

PROSPECTS

Hong Kong enjoyed a robust macro economy in 2017. The local consumption power is strong, likewise the real estate market and the stock market. Unemployment rate is a mere 2.9%, a 10-year record low. Looking ahead in 2018, the main challenge will come from the rising interest rate of the U.S. dollar. If the United States repeatedly raises interest rates during the year, the Hong Kong interest rate will inevitably and sparingly follow due to the linked exchange rate, thereby increasing the burden in mortgage payments. With the promulgation of trade protectionism by U.S. President Donald Trump, China may be affected to certain extent. It is fortunate that the central government leaders have remarkable foresight in implementing proactive policies to gradually change from an export-oriented economy to a consumption-led economy, thereby minimizing the negative impacts.

For the local real estate market in the coming year, it is expected that after years of rapid growth, price levels will remain stable with an upward bias. The Group's Harbour Park project has been granted occupation permit in January 2018 and profits derived from the pre-sale of 97% of the units will be accounted for in 2018. Coupled with the rental income from the commercial arcades, they will comprise the Group's main source of income for the coming year.

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.

Dr. Lam Ko Yin, Colin

Chairman

Hong Kong, 20 March 2018

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Hong Kong Ferry (Holdings) Company Limited

Annual Report 2017